Question

Which use of money is demonstrated in the following short storie? Be sure to explain how you arrived at your answer.

Matt and Leroy have both saved $300.00. Matt decided to buy the new video game console that he has had his eye on for some time. Leroy decided to put his money into a bank account until he saw something he really wanted to buy. One year later, a newer version of the video game console was out, and Matt’s version was no longer valuable. Leroy’s money, however, was still worth $300.00.

Answer 1

Two out of the three uses of money are identifiable in this short story

1.Means of exchange.

2.Store of value

3. Unit of account

Explanation:

Means of Exchange and Store of value were the two uses of money that can be explained by this short story.

1. Means of exchange: When Matt decided to buy the new console, he used the money as a mean of exchange

2. Store of value: When LeRoy decided to save the money for one year and the money still have the same value of $300.

As for the third use of money Unit of account, It is not illustrated in the short story but an example of this use is the bookkeeping done in the accountant department of the store that sold the console.