ECONOMICS
MONEY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Use it to compare two houses that are different prices.
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Buy jeans at the mall.
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Buy a rare baseball card that you expect will increase in value.
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Trade a cup of sugar for two eggs.
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Detailed explanation-1: -Money acts as a standard of value by making it easy for people to compare the value of different goods and services according to a uniform reference point. Money can also be used as a store of value to make transactions more efficient.
Detailed explanation-2: -Money acts as a means of calculating relative prices of goods & services.
Detailed explanation-3: -Standard of value is an agreed-upon worth for a transaction in a country’s medium of exchange, such as the U.S. dollar or Mexican peso. A standard of value allows all merchants and economic entities to set uniform prices for goods and services. This standard is necessary in order to maintain a stable economy.
Detailed explanation-4: -Value of money is what one unit of money can buy and price level is the average of prices of all the goods and services within an economy. So when the price level increases the value of money goes down and vis a versa. Hence the relationship between price level in an economy and value of money is inverse.