AUECO102 Lecture 6: AUECO 102- Lecture 6

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17 Jan 2019

School

University of Alberta

Department

Augustana Faculty - Economics

Course

AUECO102

Professor

Dr. Yasser Fahmy

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Document Summary

Money is the set of assets in economy that people regularly use to buy goods and services from other people. Money has three functions in the economy: medium of exchange, unit of account, store of value. A medium of exchange is: an item that buyers give to sellers when they want to purchase goods and services, anything that is readily acceptable as payment. The functions of money: a unit of account is the yardstick people use to post prices and record debts. Store of value: a store of value is an item that people can use to transfer purchasing power from the present to the future. Liquidity: liquidity is the ease with which an asset can be converted into the economy"s medium of exchange. The paper currency bills that bear a denomination like , , or that the declares as legal tender worth that much of goods and services.

Related Questions

The “yardstick” that people use to post prices and record debts is called:

(i) a medium of exchange.

(ii) a unit of account.

(iii) a store of value.

(iv) liquidity.

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1. To say money is socially defined means that:

A) the money supply includes all public and private securities purchased by society.

B) whatever performs the functions of money extremely well is considered to be money.

C) society, acting through Congress, specifies what shall be included in the money supply.

D) money has been defined in a Constitutional amendment.

2. Money functions as:

A) a medium of exchange.

B) a store of value.

C) a unit of account.

D) all of these.

3. If you are estimating your total expenses for school next semester, you are using money primarily as:

A) a store of value.

B) an economic investment.

C) a unit of account.

D) a medium of exchange.

4. If you place a part of your summer earnings in a savings account, you are using money primarily as a:

A) medium of exchange.

B) store of value.

C) standard of value.

D) unit of account.

5. If you write a check on a bank to purchase a used Honda Civic, you are using money primarily as:

A) a store of value.

B) a medium of exchange.

C) a unit of account.

D) an economic investment.

6. A $70 price tag on a sweater in a department store window is an example of money functioning as a:

A) standard of deferred payments.

B) medium of exchange.

C) unit of account.

D) store of value.

7. Stock market price quotations best exemplify money serving as a:

A) index of satisfaction.

B) store of value.

C) medium of exchange.

D) unit of account.

8. Purchasing common stock by writing a check best exemplifies money serving as a:

A) medium of exchange.

B) unit of account.

C) index of satisfaction.

D) store of value.

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A country that has never had its own currency has formed a central bank and put you in charge of developing money. It needs to perform the necessary functions of any good currency efficiently (i.e., being a medium of exchange, a store of value, and a unit of account). Because your country is interested in trading with other members of the global economy, other nations must have faith in its fitness and the currency exchange markets must be willing to accept it. Though your answer needs to be correct in terms of economic theory (so be sure to read the assigned chapters), creativity and having fun with it is strongly encouraged.

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AUECO102 Lecture 6: AUECO 102- Lecture 6

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