Economic functions of money, Macroeconomics

Assignment Help:

Money is generally considered to have three economic functions:

  • A medium of exchange. This is its most significant role. Without money we would live in a barter economy where we would have to trade services and goods for other services and goods. If I had fish but wanted bread, I would need to find someone who was in precise opposite situation. In a monetary economy I can trade fish for money with one individual and money for bread with another. Money solves what is known as the double coincidence of wants.
  • A unit of account. In a monetary economy, all prices can be expressed in monetary units that everyone may relate to. Without money, prices should be expressed in units of other goods and comparing prices are more difficult. You can find that a grilled chicken costs 2 kilos of cod in one place and 4 kilos of strawberries in another. Finding the cheapest grilled chicken isn't easy.
  • Store of value. If you are a fisherman and have a temporary surplus of fish that you want to store for future, storing the fish may not be a great idea. Money, conversely, stores well. Other commodities, like gold, have this feature as well.

Related Discussions:- Economic functions of money

Bonds are more attractive to investors, Briefly explain if you agree with t...

Briefly explain if you agree with the following statement: If interest rates rise, bonds become more attractive to investors, so bond prices rise. Therefore, when the interest rat

Interdependence of macroeconomics and microeconomics , INTERDEPENDENCE OF M...

INTERDEPENDENCE OF MACROECONOMICS AND MICROECONOMICS In microeconomics, the underlying assumption is that the total output, total employment and total spending are given. It th

Real wage, what wil hapen to the real wage if the nominal wages and prices ...

what wil hapen to the real wage if the nominal wages and prices rise at the same rate per year?

International trade, How can achieve mutual gain from international trade?

How can achieve mutual gain from international trade?

Equilibrium price and quantity of hybrid vehicles, Suppose gasoline and hyb...

Suppose gasoline and hybrid vehicles are substitutes. Draw a graph indicating what will happen in the market for hybrid vehicles if the price of gasoline increases. Be sure to labe

BANK, HOW CAN CENTRAL BANK INFLUENCE THE STABILITY OF THE BANKING SYSTEM?

HOW CAN CENTRAL BANK INFLUENCE THE STABILITY OF THE BANKING SYSTEM?

Positive and normative economics, POSITIVE AND NORMATIVE ECONOMICS E...

POSITIVE AND NORMATIVE ECONOMICS Economics as a social science adopts an analytical approach to the study of changes in economic variables on the actions of human beings. Th

Allocate their scarce resources, What are the three methods that societies ...

What are the three methods that societies have used to allocate their scarce resources? Give an example of each method. Give an example of a good that uses all three methods at onc

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd