Description: A medium of exchange is an intermediary instrument or system used to facilitate the purchase and sale of goods and services between parties.

Real World Example: If one person has 2 eggs and another person has 2

Pros: As long as its value is recognizable, reasonably stable, and portable, a medium of exchange will work. Both parties can trade to receive something favorable/desirable.

Cons: Value must be reasonably stable. Using medium exchange allows for greater efficiency in an economy and stimulates an increase in overall trading. A medium of exchange won't work if one person may not want what the other person is trading.

Description: A store of value is an asset, commodity, or currency that maintains its value without depreciating.

Real World Example: Many economies throughout history have used gold, silver, and other precious metals as currencies because of their ability to store value, their relative ease of transport, and the ease of exchanging them for different denominations.

Pros: The shelf life of gold and other precious metals make good stores of value.

Cons: A nation's currency must be a reasonable store of value for its economy to run smoothly.

Description: If you're an hourly employee, you're paid for all the hours you work. Your employer must pay you more if they want more of your time. 

Real World Example: John is a 15 year old who works as Best Buy employee.

Pros:

• More time to focus on family and hobbies

• Employees can apply for overtime, which leads to more pay but more hours required to work.

• You don't have to worry about work when you're at home.

Cons:

• Employers can cut your hours

• Employees get affected when the company goes through tough times

• Have to work a certain amount of hours to receive a sufficient amount of pay

Description: A salary is a fixed wage, usually cited as a monthly or annual salary.

Real World Example: Devin works as a Mechanical Engineer, and he earns $94,752 a year.

Pros:

• You get a fixed rate of pay each week.

• Easier to keep track of how much money you are making.

• Employer-sponsored benefits, such as healthcare coverage, paid vacation, and sick days

Cons:

• You will receive no compensation for working extra hours.

• Harder to separate time worked from personal time

• Even when receiving a salary, you have to spend more time working to meet financial goals and responsibilities.

Description: Many customer service providers-waiters, hairstylists, taxi drives and hotel workers-rely heavily on tip income because the jobs typically pay minimum wage.  

Real World Example: Lacy works as a waitress at Chili's, and she writes down all of the people's orders in a short amount of time.

Pros:

• Tips can be considered a bonus because of people get paid minimum wage.

• Tip income helps people with minimum wage earn more money.

Cons

• Tips are taxable and deductible

• People get paid minimum wage and have to rely on tips for more income/pay.

• Have to keep track of a daily tip log and report tips to your employer but there is a guarantee you may lose track of your tips.

Description: An independent contractor is a self-employed person or entity contacted to perform work-or provide services to-another entity as a non-employee. 

Pros

• More control over when and how much you work.

• Complete control over building their business, from hiring and firing to choosing clients.

• No limit on money earned

  
  

Cons

• You have to pay your own Social Security and Medicare taxes.

• Not eligible for employee benefits

• Responsible for all of their business expenses.

Description: Dividends are the percentage of a company's earnings that is paid to its shareholders as their share of the profits. 

Pros

• Dividend payments reflect positively on a company and help maintain investors’ trust.

• Dividends signal that a company has stable income and is generating profits.

Cons

• Dividend payments and amounts are determined by the company's board of directors.

• Many companies do not pay dividends and instead retain their earnings to be invested.

Description: A capital gain refers to the increase in the value of a capital asset when it is sold.

Pros

• Lower than ordinary income taxes

• Increase of value of asset

Cons

• Applied to any type of asset

• The gain may be short-term (one year or less) or long-term (more than one year) and must be claimed on income taxes.

Description: A cryptocurrency is a digital or virtual currency secured by cryptography, which makes it nearly impossible to counterfeit or double-spend.  

Pros

• Cheaper and faster money transfers

• Decentralized systems that do not collapse at a single point of failure

• Removes third parties

Cons

• Price volatility

• High energy consumption for mining activities

• Use in criminal activities

• Have become highly centralized

Description: A unit of account is defined as any standard numerical monetary unit of measurement when valuing a good, service or transaction. 

Real World Example: We might measure the value of a cup of coffee to be $5 USD. The USD (US Dollar) is acting as a unit of account.

Pros:

• Using money as a unit of account means it can be easily divided, multiplied, added or subtracted.

• A unit of account can be used as a measuring tool to value goods, services and transactions

• Money as a unit of account makes it possible to account for profits and losses, and balance a budget.

Cons

• Money can be considered scarce in some places

• Inflation

• Deflation