Functions of money Flashcards
1
Q
Functions of money
A
What money is, how and why its used.
2
Q
What are the four functions of money?
A
- Unit of account
- Means of exchange
- Store of value
- Legal tender
3
Q
Unit of accounts definition?
A
Money can be used to place a value on goods and services. You exchange money for an equivalent valued good or service.
4
Q
Means of exchange definition?
A
Money is used to sell, buy or trade goods and services, makes it simple, EXAMPLE: 100 apples for one phone.
5
Q
Store of value definition?
A
Money has a value, that value can be stored, and used in the future, unlike an apple to would go bad, therefor loosing its value.
6
Q
Legal tender definition?
A
Money is the legal means to pay for good and services. Its the legal national currency of a country and official method of payment.
