Question

The roles of money

Alex just graduated from college and is now in the market for a new car. He has saved up $4,000 for a down payment. He's deciding between a Super and a Duper. The Super is priced at $23,599, and the Duper is priced at $18,999. After agonizing over the decision, he decides to buy the Duper. He writes the dealership a check for $4,000 and takes out a loan for the remainder of the purchase price. Identify what role money plays in each of the following parts of the story. (Medium of exchange, unit of account, or store of value)
A. Sean writes a check for $4,000.
B. Sean can easily determine that the price of the Super is more than the price of the Duper.
C. Sean has saved $4,000 in his checking account.

Answer 1

Medium of exchange

unit of account

store of value

Step-by-step explanation:

Money is anything that is generally accepted as a means of payment for goods and services and for repayment of debt.

Functions of money

1. Medium of exchange : money can be used to exchange for goods and services. For example, by writing the check, he is exchanging money for a car

2. Unit of account : money can be used to value goods and services, For example, price was used to determine which was more expensive between the super and the duper

3. Store of value : money can retain its value over the long term, this it can be used as a store of value.