CheckPoint Money - turkeys Money is a medium of exchange...

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Running head: CHECKPOINT: MONEY 1 CheckPoint: Money Darrell Dannelley XECO/212 October 14, 2011 Troy Mahone
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CHECKPOINT: MONEY 2 CheckPoint: Money Money as a unit of account expresses how the prices of various goods are conveyed in a common monetary unit. At a store a bag of chips cost $1 and a frozen turkey cost $20. If we did not use a common unit of account then the cost of a bag of chips would be one twentieth a frozen turkey or a frozen turkey would cost twenty bags of chips. The most common function of money is it is used as a medium of exchange. A nursery is paid $100 for a large tree. The buyer used money as a medium of exchange for this product. If money was not used as a medium of exchange the nursery might have been paid with five frozen
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Unformatted text preview: turkeys. Money is a medium of exchange because it is universally accepted. Money as a store value is well known. The function of money as a store value is that money can be saved for a later use. If a man is paid $40 to plant a tree, he is able to spend a few dollars now and save the rest for latter. If the man was paid with two frozen turkeys he would have a hard time saving a frozen turkey without it going bad before future use. A frozen turkey that thaws and goes bad could not be used to exchange with, money on the other hand my change value due to deflation or inflation but it will still be accepted. CHECKPOINT: MONEY 3 Reference Mankiw, N. G. (2007). Principles of economics (4th ed.). Mason, OH: South-Western Cengage Learning....
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CheckPoint Money - turkeys Money is a medium of exchange...

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