defining money

Money is defined as being any generally accepted means of payment for delivery of goods or the settlement of debt

Money is defined by its functions. 

Medium of exchange - money allows economic agents to exchange goods without the need for barter.

Store of value - individuals can choose to forgo consumption in the current time period and save to increase their spending power in the future. They are more likely to do this when there is confidence that money will hold its value. 

Inflation has the effect of reducing the internal purchasing power of money. This is indicated by the chart below which tracks the UK retail price index from 1987 onwards. Britain has enjoyed relatively stable inflation since the early 1990s - but despite this, the internal value of money has continued to decline.

Unit of account - money as a common unit of account enables us to compare the relative prices of goods and services in pounds and pence. 

Changes in relative prices cause switches in demand as consumers respond to the incentive of lower prices for some goods and services.

Standard of deferred payment - allows payment for goods and services consumed today in a future time period, for example, the mortgage on a house or a loan to purchase a car.