Functions and Roles of Money

The video explains the functions of money in modern economies, highlighting its roles as a medium of exchange, store of value, unit of account, and standard for deferred payments. It contrasts the inefficiencies of barter systems with the convenience of money, emphasizing its importance in facilitating trade and economic stability.

What is the primary role of money according to economists?

• A tool for saving

• A medium of economic exchange

• A form of entertainment

• A measure of wealth

Why is barter considered inefficient in modern economies?

• It involves fewer people

• It is more reliable than money

• It is faster than using money

• It requires a double coincidence of wants

How does money solve the problems associated with barter systems?

• By allowing a wide range of goods and services to be purchased

• By eliminating the need for trade

• By reducing the number of jobs

• By making goods and services free

What is one advantage of money as a store of value?

• It never loses value

• It is immune to inflation

• It increases in value over time

• It is more efficient than storing perishable goods

What is a potential downside of money as a store of value?

• It can spoil like food

• It is subject to inflation

• It is difficult to save

• It is not widely accepted

How does money function as a unit of account?

• By being a physical object

• By providing a standard measure of value

• By being a form of entertainment

• By being a rare commodity

Why is money considered a medium of exchange?

• It is not widely accepted

• It can be used to pay for goods and services

• It is difficult to transport

• It is only used in specific regions

What does it mean for money to be a standard for deferred payments?

• It is only used for barter

• It is not useful for future agreements

• It allows for future transactions and loans

• It can only be used immediately

How does the standard of deferred payments benefit the economy?

• By making all transactions immediate

• By allowing goods and services to be bought now and paid for later

• By reducing the need for money

• By eliminating the need for loans

Which of the following is NOT a function of money?

• Store of value

• Source of entertainment

• Medium of exchange

• Unit of account