there are 3 main purposes for money.1)its is used as a medium of exchange
2)Its a unit of account, helping us to judge the value of something
3)Its a store of value meaning that it will not lose its worth over time(quite arguably with paper money!!)
Types of money: Commodity money:have intrinsic value. like gold, rice,silver
Fiat Money:without intrinsic value. Government simply has decreed that coins and notes of negligible intrinsic value are legally worth a certain amount(dollar could have been exchange for gold till 1971 thus becoming pure fiat currency)
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