Money - Medium of exchange - an object that is generally used in exchange for goods and services. If it didn't exist we would need to barter. - Unit of account - an agreed measure for stating the prices of goods and services. - Store of value - money can be held for a time and used later in exchange for goods and services.

The importance of money in any economy can be seen from the role it plays: 1. Money acts as a medium of exchange. It allows society to make unlimited exchanges and transactions so goods can move around the economy. Money also allowed individuals and firms to generate wealth and increase it. This is achieved when one can readily purchase produced items and sell them for a higher value than they were purchased. The existence of money allows goods and services to get to the people who need them. 2. Money also acts as a store of value, this is where one can sell a commodity, in return for money and be able to be reliably saved, stored, and retrieved. 3. The most important role money plays is it acts as a unit of account. This is a common standard by which all the market value of goods, services, and other transactions can be measured and compared. Without this the value of an economy could not be calculated. 4. With gold completely divorced from money, initially the British pound sterling was the world's reserve currency after World War II. With Britain's demise on the international scene the US and its dollar become the world's reserve currency. The US receives its legitimacy not from any intrinsic value but due to the global standing in the US and its ability to press the world to view global products using the dollar. This means for any nation wanting to purchase oil or platinum in the international markets they would need to convert their currency into dollars and then take possession of such goods. This means