c) the functions of money

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4 Terms

1
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  • explain the function of money as a medium of exchange?

  • bartering can be inefficient, as it requires a double co-incidence of wants

  • money eliminates the need to barter and a double co-incidence of wants

2
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  • explain the function of money as a measure of value?

  • money ascribes value to goods and services

  • knowing the value of goods and services allows consumers and firms to make fair exchanges

3
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  • explain the function of money as a store of value

  • money holds the same value over time (except in cases of inflation)

  • so money can be saved and exchanged over long periods of time

4
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  • explain the function of money as a method of deferred payment

  • money is an acceptable way to arrange the terms of credit or to settle any debts

  • it is also easier to pay workers between regular intervals with money