• Anything that is generally accepted as a medium of exchange can be considered as money.

 Characteristics of Good money

• Acceptability
• Durability
• Uniformity
• Divisibility
• Portability
• Stability of value
• Discourages forgery

Currency

• Money which is legally accepted for transactions within the country is Currency.

Bank Money

• Current accounts with commercial banks are Bank money.

Modern Money

• Currencies and cheques are introduced as Modern money.

Near Money

• Assets that can be converted to a medium of exchange easily are Near money.

Money Substitutes 

• Money Substitutes act as a temporary medium of exchange but they do not comply with the function of money as a store of value.

Electronic Money

• Electronic money is a method of transaction through software storing the value of physical money electronically.

Functions of Money

• As a medium of exchange.
• As a store of value.
• As a unit of account.
• As a medium of deferred payment.

Internal value of Money 

• The Internal value of money is the quantity of goods and services that can be purchased by a unit of money of that country.
• The Internal value of money is determined on the domestic price level.

External value of Money 

• The External value of money is the quantity of goods and services that can be purchased by a one unit of money of that country from another country.
• The External value of money is determined on the exchange rate.