Question

Raphael 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, Raphael buys the computer and writes a check for $1,299. Identify what role money plays in each of the following parts of the story.

Answer 1

Money's role as 'medium of exchange' , 'store of value'

Step-by-step explanation:

Money is something which is used as : medium of exchange, measure of value, store of value, standard of deferred payments.

Money used by Raphael to purchase computer : reflects role of money as a 'medium of exchange', as it is used as a purchasing power mode to buy computer. Using money as medium of exchange & to transfer purchasing power, is much convenient than barter system (commodity to commodity exchange)

Bank money left after computer purchase : reflects role of money as a 'store of value'. Money is the most convenient, economical, stable value mode of storing value ; unlike barter goods requiring maintenance, having unstable value. The stored money can be used for future purposes (eg - vacation later).