Money in Economics

Money the word itself brings smile to majority of human beings and all of us want to have as much cash as possible and often that is the reason for stress, above is the real life situation but as far as economics is concerned money has different meaning. In economics money is something which satisfy your needs and wants so for example if you have cash than you can buy with that cash needs like food, shelter, clothing and wants like expensive cars, 3d television, holidays and so on.

In real life people consider money as absolutely important and think that without it one cannot survive but as far as economics is concerned it treats money differently, according to economics money or cash is just a medium to buy goods and services which are essential for survival. Money or cash is just paper in economics and if people start exchanging goods and services for something other than cash than cash has no value. Consider a situation where you are put in an island with millions of dollars but on that island nobody knows about dollars and it is not used as a means of exchange than all your millions of dollars are of no use and you cannot even buy a needle with all those millions of dollars

In ancient times people used to follow barter system where goods and services were exchanged for goods and services and at that time there was no money still people used to survive, so the point is that money is important because it is a means of exchange and not for any other reason.

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