The equivalent of the cost of goods and services is ... Money as an equivalent

People are so used to money to such a degree that they do not even ask themselves what the bills and coins really are. One of the earliest definitions of the economy says that the universal equivalent of the value of goods and services is money, but how to explain this term to those who did not study the economy? After all, money was not always, and not all need to become financiers. To use the tool, it is enough to understand what it is for and how it works.

Barter exchange and its shortcomings

Initially, commodity relations began as an ordinary barter exchange. This way of exchanging material values has its drawbacks, because it is quite difficult to choose the type of barter that both parties like. The simplest example: a fisherman can exchange his catch for game, hunted by a hunter, but only on condition that the hunter really needs fish. If the hunter does not need a fish, but something else that is not offered at the moment for exchange, then both are in a quandary. Or, one of the parties does not need the quantity of goods that the initiator of the exchange wishes to receive. People needed a tool that facilitated the commodity relationship, and it appeared.

Different nationalities used different items: shells, pelts of a fur-bearing animal, a certain kind of pebbles, gold nuggets. The best equivalent of the cost of goods and services is a certain thing that can be stored for a long time, which has a certain value in itself, while allowing the "crushing" of the value of goods. So there was money.

Universal commodity of high liquidity

In themselves, money is a commodity: they must be produced or, as in the case of the first primitive substitutes for finance, extracted. And this product has a high degree of liquidity, that is, it is valued almost always, it can at any time be exchanged for other goods or other valuables.

Thus, at the moment the only equivalent of the cost of goods and services is money, but each country has its own financial system and its own kind of finance. The best illustration of the fact that money is a commodity is the exchange rate - the financial units of different countries have different costs relative to each other.

The fair equivalent of the value of goods and services is money

So, we decided that the goods can be exchanged for money, that is, sell. Services should be considered as a kind of product. If someone spends their energy and time, and this is in demand by a party ready to pay for someone else's efforts, then there is no particular difference between a service and a commodity as a material unit. Buying, selling, as well as paying for others' efforts, ultimately come down to an exchange, but money acts as an intermediary value. Thus, trade is the equivalent of an exchange: goods and services are exchanged for other goods and services, but with an intermediate phase, namely exchange for money, which then can be changed for necessary goods.

At the same time, inevitably there arises such a burning question as value or price. By and large, the product or service is worth as much as the buyer is willing to pay for it. This parameter can be artificially managed by inflating the value of certain items or services. It turns out that the mutual equivalence of goods or services is determined by their "course" - the value at which they are bought or sold. Hence the concepts of high cost or, conversely, cheapness are taken.

Some financial processes

Despite the fact that we use money as the equivalent of all possible values, even intangible, they remain a commodity and, therefore, have their added value. For example, the loan funds that we receive, paying the banks assigned to them a percentage. In fact, this percentage is an added value, because in the end you have to pay for the goods received.

Also, money has to be produced, and this, in turn, also requires money. If the purchasing power of a financial unit is reduced, that is, one conditional bill today you can buy less goods than yesterday, this process is called inflation. Money becomes cheaper, and for the consumer it is certainly a negative process, although it is quite natural.

The study of money and their opportunities gives a chance to change the attitude to so-called wealth a little - the presence of a large stock of tangible assets in monetary terms. After all, if we know how the tool works, then it becomes easier for them to use.