Functions of Money- Macro Topic 4.3

The video tutorial explains the concept of money, its three main functions—medium of exchange, unit of account, and store of value—and the impact of inflation on stored value. It distinguishes between fiat money, which has no intrinsic value, and commodity money, which does. The video also discusses the historical context of the gold standard and uses Clifford dollars as a teaching tool to introduce currency exchange concepts.

What is one of the primary functions of money that allows it to be used for transactions?

• Store of value

• Medium of exchange

• Unit of account

• Intrinsic value

How does money function as a unit of account?

• By storing value over time

• By having intrinsic value

• By providing information about the value of goods and services

• By being accepted for payments

What happens to the stored value of money during inflation?

• It diminishes

• It remains the same

• It becomes more valuable

• It increases

What is the main difference between fiat money and commodity money?

• Fiat money has no intrinsic value

• Fiat money has intrinsic value

• Commodity money cannot be used for transactions

• Commodity money is used more today

What is the current status of the gold standard in the world?

• It is used alongside fiat money

• It is the primary standard for currency

• No country uses it anymore

• It is still used by some countries