A unit of account can be divided so that its component parts will equal the original value. If you divide a dollar into four quarters, the total value of the four quarters still equals a dollar. Likewise, if you cut a bar of gold in half, the two pieces together will equal the same value as the original bar as a whole.
What is an example of money as a unit of account?
A unit of account can be divided so that its component parts will equal the original value. If you divide a dollar into four quarters, the total value of the four quarters still equals a dollar. Likewise, if you cut a bar of gold in half, the two pieces together will equal the same value as the original bar as a whole.
Which is an example of money as a unit of account quizlet?
Writing a price tag is an example of the unit of account function of money. As a store of value, money is used to store purchasing power between the time income is received and the time it is spent.
What does money as a unit of account mean?
A unit of account: a means of keeping track of how much something is worth . A store of value: it can be held and exchanged later for goods and services at an approximate value. A standard of deferred payments (this is not considered a defining purpose of money by all economists).
Which of the following is example of representative money?
A check is an example of representative money.
What is an example of a unit?
An individual, group, structure, or other entity regarded as an elementary structural or functional constituent of a whole. The definition of a unit is a fixed standard amount or a single person, group, thing or number. An example of a unit is a single apartment in an apartment building .
What are the 4 types of money?
Economists identify four main types of money – commodity, fiat, fiduciary, and commercial . All are very different but have similar functions.
What is an example of barter?
Barter is an alternative method of trading where goods and services are exchanged directly for one another without using money as an intermediary. For instance, a farmer may exchange a bushel of wheat for a pair of shoes from a shoemaker .
Is a house a unit of account?
Essentially, a unit of account is a measurement for value . ... Such a property of money enables us to compare, for instance, the value of a car with the value of a house. Or to compare the price of apples and oranges – even though they are quite different.
What is the money multiplier formula?
Money Multiplier = 1 / Reserve Ratio
The more the amount of money the bank has to hold them in reserve, the less they would be able to lend the loans. Thus, the multiplier holds an inverse relationship with the reserve ratio.
What is a unit of money called?
dollar . noun. the unit of money used in the US and in several other countries such as Canada and Australia.
Why is money a unit of account?
As a unit of account, money serves as the common base of comparison that people use to present prices and record debts . Without a common unit of account, these tasks would be much more difficult. ... In this way, money serves as a store of value, allowing you to trade current consumption for future consumption.
What are two types of money?
There are two types of money: commodity money , which is an item used as money, but which also has value from its use as something other than money; and fiat money, which has no intrinsic value, but is declared by a government to be the legal tender of a country.
What is the best example of money?
The best example of money that illustrates its properties is gold . Gold is universally accepted by most cultures as a means of payment because it is relatively scarce, and new supplies are difficult to find and mine.
What is the function of money that describes transactions?
Money serves as a medium of exchange , as a store of value, and as a unit of account. Medium of exchange. Money’s most important function is as a medium of exchange to facilitate transactions.
What are the three functions of money?
To summarize, money has taken many forms through the ages, but money consistently has three functions: store of value, unit of account, and medium of exchange .
