EC140 Chapter Notes - Chapter 24: Economic Equilibrium, Academy Of Social Sciences, Money Multiplier
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A means of payment is a method of settling a debt. A medium of exchange is any object that is generally accepted in exchange for goods and services. Without a medium of exchange, goods and services must be exchanged directly for other goods and services bartering. A medium of exchange overcomes the need for a double coincidence of wants which rarely occurs. Money isn"t the only medium of exchange, you can buy with a credit card. A unit of account is an agreed measure for stating the prices of goods and services. If the price of a movie is , and the price of a pop is , you know right away that seeing one movie costs you 2 cases of pop. Though it would be confusing to state that, so we use money to state the cost of goods.