Question

Most of the time it is quite difficult to separate the three functions of money. Money performs its three functions at all​ times, but sometimes we can stress one in particular. For each of the following​ situations, identify which function of money is emphasized.(a) Brooke accepts money in exchange for performing her daily tasks at her​ office, since she knows she can use that money to buy goods and services.In this​ case, money is being used as a _______.(b) Tim wants to calculate the relative value of oranges and​ apples, and therefore checks the price per pound of each of these goods quoted in currency units.In this​ case, money is being used as a ______.(c) Maria is currently pregnant. She expects her expenditures to increase in the future and decides to increase the balance in her savings account.In this​ case, money is being used as a _______.

Answer 1

Step-by-step explanation:

a. Money is being used as a medium of exchange because Brooke is accepting money in exchange for doing her daily tasks at the office. Money facilitates transactions: Brooke will use some of that money to buy food, if money wouldn´t exist, the company will have to pay her in food, but for the company is difficult to measure how much apples, rice, coffee and other does Brooke´s work represent.

b. Money is being used as a unit of account because it provides a common measure of the value of goods or services, in this case oranges and apples.

c. Money is being used as a store of value. Even though money loses value because of inflation is the most liquid asset a person can have.