Xeco/212 Week 6 Checkpoint

Topics: Store of value, Money, Currency Pages: 1 (274 words) Published: March 2, 2012
Week 6 Checkpoint
Mark Holzhauser
XECO 212
Nicholas Kuzmich

Money as a unit of account serves as a way of comparison that we use to present prices and debts. A great example is a restaurant charges $5.00 for a hamburger and $20.00 for a steak. Using money makes it easy to compare the two items. We can clearly tell that the steak costs more than the hamburger. It would be much more difficult to compare if a hamburger costs 10 apples and a steak costs 25 bananas.

Money is used as a medium of exchange which simply means that money is used by buyers to purchase goods or services from sellers. We could go back to the restaurant example. The restaurant would gladly accept money for its goods and services because money is universally accepted as a medium of exchange. I doubt that you could bring in a bag of apples and purchase a meal. Money just makes more sense and is accepted by all.

Money also serves as a store of value. When we work we are paid a wage. Some of that wage is spent immediately and some is saved for the future. The portion that is saved for the future is using money as a store of value. You later can use that money to purchase goods and services. If we used fruit as a store of value, the fruit would go bad rather quickly and we would not be able to use it to purchase goods and services in the future. Try going to the bank and depositing 10 bananas into your savings account.
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