Functions of money

Question 1

What are the four functions of money?

Answer 1

-Unit of Account
-Means of Exchange
-Store of Value
-Legal Tender

Question 2

What is Unit of Account?

Answer 2

-Money can be used to place a value on goods and services.
-You exchange money for an equivalent value in goods and services.

Question 3

What is Means of Exchange?

Answer 3

Money is used to sell, buy or trade goods and services. Money makes it simple to do this; otherwise you would have to swap products or services in order to trade (bartering).

Question 4

What is Store of Value?

Answer 4

Money has a value. It can be stored, for example in a bank, and then used in the future to buy goods and services.

Question 5

What is Legal Tender?

Answer 5

Money is the legal means you use to pay for goods and services. Legal tender is the national currency of the country. It is the official method of payment.

Question 6

What are the factors influencing your view of money?

Answer 6

-Personal attitudes
-Life Stages
-Culture
-Life Events
-External Influences
-Interest rates