MARYHILL COLLEGE, INC.

Higher Education Department

Lucena City

Name: Major
Course & Year: Date:

MODULE # 1: MEANING OF MONEY

GUIDE QUESTIONS:
Answer the questions in your own words. (Max: 15 sentences, Min: 10 sentences).

1. Explain the following:

Money as medium of exchange;

In a modern economy, money plays many distinct roles. Money is a common form of commodity in an economy
that individual use to obtain products and service from other citizens or enterprises. The medium of exchange is
something that custimers can share with the seller if they wish to acquire products or service from the seller. While
many items may be used as a means of trade in the economy, money is the most valuable means of exchange in our
culture. Money helps facilitate trade, because people in the economy generally recognize it as valuable. Since most
people recognize money as valuable, they are willing to trade money for goods and services one day to use the
money they received as a seller to buy goods or services from someone else.

Money as unit of account

It is a standard numerical unit for measuring the market value of goods, services and other transactions. It is a
standard of relative value and deferred payment and, as such, is a necessary prerequisite for the development of
commercial agreements involving debt. In order to function as a unit of account, money must be divisible into
smaller units with no loss of value, fungible and a specific weight or size to be verifiably countable. Due to its use as
a means of exchange for
both purchase and sale, and its use as a means of assigning prices to all kinds of other goods and services, money
can be used to keep track of money earned or lost through multiple transactions and to mathematically compare the
value of money of different combinations of different quantities of goods and services.

2. Provide examples of transactions in our modern monetary economy that take place through barter.
 MARYHILL COLLEGE, INC.
Higher Education Department
Lucena City

3. What comprises the wealth of (a) households? (b) firms?

Household wealth is depend on what group the family belongs to. We have different groups or hierarchy when it
comes to household wealth. Top hierarchy may compromise their wealth when they are investing too much in
something that they don’t need. They tend to invest on assets that they don’t need sometimes and spend too much on
luxury items that can changed the value every year. And the buttom hierarchy of the society may compromise their
wealth when they don’t have stable income source that they only spend for their daily living. There's nothing left in
their income because it just a right amount for their needs.

While firms wealth may compromise, when a company keeps their stock high and there's no investor that wants
to invest. Firm wealth is based on the firms financial capabilities. It may compromise their wealth when they invest
or the economic of the country is not good.

4.