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Making Sense of the Ups and Downs of Prices

August 2013

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Classroom Edition

Jul 31, 2013 Money and Inflation: A Functional Relationship

By Scott Wolla
Page One Economics Newsletter, March 2013

They say that "money makes the world go round." Just imagine a world without money as our method of payment for everyday transactions. Without money, we would all need to barter for necessary goods and services. For example, suppose an accountant needs to have her car fixed. Under a barter system, she would have to find someone who needed some tax advice in exchange for car repairs. The search to find a barter partner is time consuming and wasteful. Money solves this problem and many others. Read more about the three main functions of money and the damaging effects of too much inflation on these functions.

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