c) The functions of money
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5 Terms
state the four functions of money
a medium of exchange
a unit of account
a store of value
a standard of deferred payment
describe the function of money as a medium of exchange
bartering = inefficient → requires a double co-incidence of wants
money eliminates the need to barter and a double co-incidence of wants
describe the function of money as a unit of account
money ascribes value to goods and services
the value of goods and services can be compared + consumers and firms can make fair exchanges
explain the function of money as a store of value
money holds the same value over time (except in cases of inflation)
→ money can be saved and exchanged over long periods of time
explain the function of money as a standard of deferred payment
money can be used to → make future payments + pay workers between regular intervals
Flashcards (29)