Functions of money Flashcards
1
Q
what are the 5 functions of money
A
- medium of exchange
- standard of deferred payment
- unit of account
- store of value
- facilitates exchange
2
Q
what is medium of exchange
A
money is widely acceptable as a medium of exchange - it facilitates transactions between buyer and seller
3
Q
what is standard of deferred payment
A
the acceptable way in each market to settle debt
4
Q
what is unit of account
A
a nominal measure used to value/cost products, assets, debt, income and spending
5
Q
what is store of value
A
an asset that holds value over time
6
Q
what is facilitates exchange
A
when the currency can be exchanged
7
Q
what are the 4 pros of specialization of money
A
- hard to counterfeit
- durable and portable
- acceptable when making transactions
- hold its value overtime
