Question

Money serves as a basic yardstick for measuring economic value (a unit of account), allowing

a. easy comparison of the relative prices of goods and services.
b. governments to restrict the issuance of private monies.
c. people to hold their wealth in a liquid form.
d. goods and services to be exchanged with a double coincidence of wants.

Answer 1

Money functions as a unit of account, allowing for easy comparison of economic values and simplifying trade-offs by acting as a common accounting method. Option a is the answer.

Step-by-step explanation:

Money serves as a unit of account, which means that it is the ruler by which we measure economic values. For example, an accountant may charge $100 to file your tax return. That $100 can purchase two pair of shoes at $50 a pair, facilitating the comparison of relative prices of goods and services.

Money acts as a common denominator, an accounting method that simplifies thinking about trade-offs, as opposed to barter, which would require a double coincidence of wants. This means each party in a trade must have what the other desires, which is vastly inefficient compared to using money as a medium.