PACCARANGAN, JUVILYN S.

BANKING AND FINANCE 302F

1. How do you differentiate money from wealth and income?
It is worth talking about the differences about wealth and income. Most people get confused
about wealth and income inequalities. Therefore, wealth can view as a capital or assets that you
own while income is the amount you made in a certain period of time. To simplify, an income is
a money you receive or earn through employments or investments while wealth refers to
financial stability such as savings and properties that you owned.

2. State two functions of money and explain.
Money is commonly used as payments for goods and services. Two functions of money:
I. Medium of exchange: It is the most important function of money because it reduces
transaction costs. That means it is an asset that buyers give to sellers when they want
to purchased goods or services.

II. Unit of account: It is used to measure and compare economic value. It is enabling
people to compare the price of different products.