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

Economy is fully utilizing its resources, The _______________ illustrates t...

The _______________ illustrates the notion of opportunity cost. If an economy is fully utilizing its resources, it can produce more of one product only if it produces less of anoth

Unemployment classification, Unemployment classification Economists som...

Unemployment classification Economists sometimes differentiate between different types of unemployment. There are many type of ways of classifying unemployment however the foll

Monopoly without tax and without price ceiling, Here from a), profit maximi...

Here from a), profit maximizing price = 7 and Q = 10. It is shown in the figure below:- The consumer surplus is shown in blue area which is given as (9-7) *10*1/2 =10 dolla

Serve on an environmental policy, Suppose you serve on an environmental pol...

Suppose you serve on an environmental policy planning board for the federal government. Your task is to propose a policy initiative aimed at reducing urban air pollution, using the

National income statistics, briefly explain any five uses of national incom...

briefly explain any five uses of national income statistics

Demographics of the customers, A firm conducted a research about the demogr...

A firm conducted a research about the demographics of their customers. For the study they collected data about the following variables: gender, marital status, credit rating (low,

After your last deposit withdraw immediately, You make a monthly deposit of...

You make a monthly deposit of $1,000 into a saving account for the next 10 years. How much can you withdraw immediately after your last deposit if your saving account pays 6% per y

SARB, REASONS TO NATIONALISE SARB

REASONS TO NATIONALISE SARB

calculate the npv and pricing models, Burwood Mining is raising capital ...

Burwood Mining is raising capital of $500,000 for its next project from the following sources: Sources Amount $ Common stock 100,000

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