Money is a unit of account

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Reference no: EM1313367

Q. Identify three roles for money: money is a unit of account, a store of value also acts as a medium of exchange. Give a brief description of these terms, highlighting the "problem" which money is solving in each case. Are these three roles independent of each other? To address this question, think about the subsequent. Suppose money exists in an economy also fulfills all three roles mentioned above. Now suppose which the government directs the central bank to print large quantities of extra currency also uses which currency to buy goods also services. Illustrate what do you predict will happen to the currency as a store of value? Will it make sense for the unit of currency to remain the unit of account? In view of the changes you list here, do you think which the currency will continue to be accepted as a medium of exchange? Can you find historical examples of situations where these changes occurred? If the local currency is rejected as a unit of account also a medium of exchange, illustrate what alternatives might be found to take its place?

Reference no: EM1313367

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