This lesson presents a comprehensive overview of money and banking, focusing on macroeconomics. It begins by explaining the barter system, highlighting its drawbacks, such as the difficulty of double coincidence of wants and the lack of a common unit of value. The resource then transitions to the emergence and definition of money, distinguishing between legal, functional, and narrow/broad definitions, and further classifying money into full-bodied and credit money. Finally, it elaborates on the functions of money as solutions to the barter system’s issues, including its role as a medium of exchange, a measure of value, and a store of value, concluding with a discussion on money supply and its components.