Money serves four main purposes in an economy:

• Medium of exchange: Money is widely accepted as payment for goods and services. This removes the need for barter, where two people must both want what the other has to trade.
• Unit of account: Money acts as a common measurement to set prices and compare the value of different items.
• Store of value: Money keeps its purchasing power over time. It allows people to save wealth today and use it to buy things in the future.
• Standard of deferred payment: Money is the accepted way to settle debts or create contracts for future payments, such as bank loans or mortgages.