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

#, what cause keynesian unemployment?

what cause keynesian unemployment?

Economics, Malaysia’s Bank Negara has cut the country’s economic growth for...

Malaysia’s Bank Negara has cut the country’s economic growth forecast to between 4 and 5 percent for 2012, weighed down by Europe’s economic woes. Discuss ONE (1) demand-management

International Trade, How can an economy achieve mutual gain from Internatio...

How can an economy achieve mutual gain from International Trade?

Benefits in a perfectly competitive market, "Nearly all critics agree that ...

"Nearly all critics agree that consumers have the most benefits in a perfectly competitive market." Does the above statement apply to microeconomics or macroeconomics? Why? Think a

Deadweight loss created by this monopoly, The market for quits is initially...

The market for quits is initially competitive and the market demand is: P=400-0.4QD. The Combined marginal costs of the firms in the quit industry are: MC=50+0.6Q. a. Draw the

Determination of all the endogenous variables, Q. Determination of all the ...

Q. Determination of all the endogenous variables? Determination of all the endogenous variables in the AS-AD model Determination of P and Y: Prices and

Aggregate supply and the as curve, Aggregate supply and the AS curve ...

Aggregate supply and the AS curve The AS curve is the aggregate supply as a function of P. It is horizontal when thesupply is low and upward sloping when the s

Effect of a wage increase, Describe the differences between the substitutio...

Describe the differences between the substitution effect of a wage increase and the income effect of a wage increase.

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