What is money primarily used for?

Money is primarily used as a medium of exchange because it facilitates transactions between buyers and sellers. This function allows people to trade goods and services without the complications that would arise from bartering, which requires a double coincidence of wants. In a barter system, both parties must want what the other has to offer, making transactions cumbersome and inefficient. Money solves this problem by providing a universally accepted form of value that can be exchanged for any good or service.

The medium of exchange role of money is essential in stimulating economic activity, allowing for easier trade and enabling people to specialize in their production, which leads to increased efficiency and productivity within the economy.

While other options, such as using money for investment or as a method for storing wealth, are important functions of money, they are secondary to its primary role in facilitating exchanges. Collecting taxes is another important function, but it relies on money's established value as a medium of exchange to be effective. Therefore, the primary purpose of money is to serve as a reliable medium through which transactions can be conducted smoothly and efficiently.