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Week 6 Checkpoint (Money)

Week 6 Checkpoint (Money)

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Published by Alegna72
Week 6 Money
Week 6 Money

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Published by: Alegna72 on Aug 19, 2011
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Money With the reference of money comes the thought of cash.

However, money is not always cash as money also can be in the form of wealth. According to the text, money is assets that people use to buy and sell goods and services in the economy that serves three functions: a medium of exchange, a unit of account, and a store of value (Mankiw, 2007). A medium of exchange is using money to make a purchase by physically handing the money over in exchange for the product. For example, when going to the store to purchase eggs, the consumer gives money in exchange for eggs. A unit of account is using money as a measurement of prices and recording debts. When purchasing a television the cost of one television may be $100 whereas the cost of the other television is $200. In looking at the unit of account definition the cost of $100 versus the cost of $200 is the measure as $100 is less than $200. This measure allows a consumer to determine what television he or she will purchase. Store of value is using an item to transfer purchasing power from the present to the future. An example of store of value is purchasing an acre of land as the land is valuable. The purchase takes place in the present and the consumer saves the purchase until he or she decides to sell the land in the future. In this scenario the consumer is holding on to the land because he or she is certain the land remains valuable for future exchanges.

N.Reference Mankiw.). (2007). Mason.G. OH: South-Western Cengage Learning . Principles of economics (4th ed.

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