Question

Darnell wants to purchase a new computer and go to the Caribbean for spring break. The computer is priced at $1,299, and the vacation is priced at $800. He has only $1,574 in his checking account, so he cannot afford to purchase both. After much thought, Darnell buys the computer and writes a check for $1,299. Identify what role money plays in each of the following parts of the story. Hint: Select each role only once. Role of Money Medium of Exchange Unit of Account Store of Value Darnell can easily determine that the price of the computer is more than the price of the vacation. Darnell has $1,574 in his checking account. Darnell writes a check for $1,299.

Answer 1

Unit of Account

Store of Value

Medium of Exchange

Step-by-step explanation:

Money can be exchanged for goods and services. Darnell exchanged money ($1299) for a computer. For money to be used as a medium of exchange, it should be generally recognised and accepted.

Money is a unit of account. Darnell compared the value of a vacation with that of a computer using their prices.

Money functions as a store of value. Money can be used to store wealth. Darnell kept his wealth (value) as money in his checking account. For money to be used as a store of value, it should be able to retain its value for a long time.