Economics: Principles, Problems, and Policies, 19th Edition

Published by McGraw-Hill Education
ISBN 10: 0073511447
ISBN 13: 978-0-07351-144-3

Chapter 31 - Money, Banking, and Financial Institutions - Questions - Page 653: 1

Answer

Money can be used as a medium of exchange, a unit of account, or a store of value. As a medium of exchange, money can purchase wide varieties of items like potatoes or staplers, rather than using the barter system in which you must exchange desirable items with someone else to get in return a product you want. As a unit of account, the value of any purchasable item can be measured, much like you can measure length or weight of an item. As a store of value, money can be stored for future use. The last function of money can be a little risky when inflation is present, since the purchasing power of the money you store could change from the time you deposit it to the time you use it.

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