What does money primarily function as?

Money primarily functions as a medium of exchange, which is essential for facilitating transactions in an economy. This role makes it easier for individuals and businesses to trade goods and services without the complications of barter systems, where direct exchanges of goods are necessary. By serving as a widely accepted intermediary, money eliminates the need for a double coincidence of wants, allowing parties to engage in transactions more efficiently.

In this capacity, money provides a unit of account, which helps in setting prices and making economic calculations simpler. It also acts as a store of value, enabling people to save and postpone consumption while maintaining purchasing power over time. The function of money as a medium of exchange underpins the overall efficiency of the economy, enabling smoother market transactions and the establishment of broader financial systems.