Unit #3 Standard #2 Functions of Money

Anything that is used as a medium of exchange, a unit of account, and a store of value?

• Fiat Money

• Currency

• Barter

• Money

Anything that is used to determine value in an exchange?

• Currency

• Store of value

• Medium of exchange

• Unit of account

What are the three functions of money?

• medium of exchange, store of value, unit of account

• medium of exchange, store of value, provides barter

• store of value, medium of exchange, creates instability

Money must be easy to carry.

• Durability

• Divisibility

• Store of Value

• Portability

Which function of money encourages people to save money?

• Medium of Exchange

• Store of Value

• Unit of Account

• Acceptability

Money must be widely accepted in exchange for goods or services.

• Divisibilility

• Acceptability

• Limited Supply

• Store of Value

Money must be scarce.

• Limited Supply

• Medium of Exchange

• Store of Value

• Fiat Money

All units of money must be identical so that people recognize it.

• Divisibility

• Unit of Account

• Uniformity

• Portability

Money must be able to withstand the wear and tear of many people using it.

• Divisibility

• Durability

• Limited Supply

• Acceptability

Trade is made easier because of this function of money that eliminates the need to barter (trade goods for goods).

• Store of Value

• Medium of Exchange

• Unit of Account

• Divisibility