Science, Tech, Math › Social Sciences What Does "Money" Mean in an Economic Context? Print Mark Wilson/Getty Images News/Getty Images Social Sciences Economics U.S. Economy Employment Supply & Demand Psychology Sociology Archaeology Ergonomics By Mike Moffatt Mike Moffatt Professor of Business, Economics, and Public Policy Ph.D., Business Administration, Richard Ivey School of Business M.A., Economics, University of Rochester B.A., Economics and Political Science, University of Western Ontario Mike Moffatt, Ph.D., is an economist and professor. He teaches at the Richard Ivey School of Business and serves as a research fellow at the Lawrence National Centre for Policy and Management. Learn about our Editorial Process Updated on May 12, 2019 Money is a good that acts as a medium of exchange in transactions. Classically, it is said that money acts as a unit of account, a store of value, and a medium of exchange. Most authors find that the first two are nonessential properties that follow from the third. In fact, other goods are often better than money at being intertemporal stores of value, since most monies degrade in value over time through inflation or the overthrow of governments. By this definition, what we typically think of as money—currency—does, in fact, fit the economic definition of money, but so do a lot of other items in the economy. Economists are quick to point out that money in an economy can take different forms, but these different forms usually carry different levels of liquidity. Journal Articles Discussing Money Credit, Money, and Aggregate Demand Long-Term Contracts, Rational Expectations, and the Optimal Money Supply Rule One Money, One Market: The Effect of Common Currencies on Trade Cite this Article Format mla apa chicago Your Citation Moffatt, Mike. "What Does "Money" Mean in an Economic Context?" ThoughtCo, Apr. 5, 2023, thoughtco.com/definition-of-money-in-economics-1148030. Moffatt, Mike. (2023, April 5). What Does "Money" Mean in an Economic Context? Retrieved from https://www.thoughtco.com/definition-of-money-in-economics-1148030 Moffatt, Mike. "What Does "Money" Mean in an Economic Context?" ThoughtCo. https://www.thoughtco.com/definition-of-money-in-economics-1148030 (accessed March 19, 2024). copy citation