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Money and Inflation: A Functional Relationship (Page One Economics)

They say that "money makes the world go round." Just imagine a world without money as our method of payment for everyday transactions. Without money, we would all need to barter for necessary goods and services. For example, suppose an accountant needs to have her car fixed. Under a barter system, she would have to find someone who needed some tax advice in exchange for car repairs. The search to find a barter partner is time consuming and wasteful. Money solves this problem and many others. Read more about the three main functions of money (a store of value, a unit of account and a medium of exchange) and the damaging effects of too much inflation on these functions in the March 2013 issue.

Graphs compliments of FRED.

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Audience:   High School, Consumers, College
Language:   English
Subjects:   AP, Economics, Data Literacy
Resource Types:   Data, Publications, Newsletter, Lessons
Concepts:   Trade/International Trade, Money, Monetary Policy, Federal Reserve System-functions, Inflation/Deflation