Money

Plain definition

Any asset that is widely accepted as a medium of exchange, a unit of account, and a store of value.

In economics

Modern money is mostly bank deposits and currency, valued because everyone expects others to accept it (fiat money). The money supply matters for inflation: when it grows faster than real output over time, the price level tends to rise. Economists track it through measures like M1 and M2.

Example

A farmer sells wheat for cash, uses the cash to buy seed, and keeps some savings in a bank account. The cash worked as a medium of exchange, prices quoted in dollars served as the unit of account, and the bank balance stored value for later.

Common confusion

Money is confused with wealth. Money is the liquid assets used for transactions (cash, checking deposits); wealth includes everything owned (houses, stocks, businesses). A billionaire's net worth is mostly non-money assets, and printing money does not create wealth.