Final answer:
Money as a unit of account means that goods and services are priced in terms of money, simplifying transactions by replacing the inefficient barter system, which relies on the double coincidence of wants, with a universally accepted medium of exchange.
Step-by-step explanation:
When we say that money serves as a unit of account, we mean that prices of goods and services are quoted in terms of money. This concept is vital for understanding how money facilitates transactions in an economy. Without money, people would have to rely on barter, which requires a double coincidence of wants. For instance, an accountant would have to find someone with the exact pair of shoes they desire and who also wants accounting services. Money simplifies this process significantly, as it acts as a common ground for valuing and exchanging an array of goods and services, thereby overcoming the inefficiency of barter.
As a medium of exchange, money enables people to sell services for money and then use that money to purchase goods. It removes the need for a direct exchange and eliminates the complex web of trades that would be necessary in a barter economy. Money, widely accepted for payment in markets for goods, labor, and financial capital, simplifies economic transactions and enables a more efficient and interconnected economy.