Money

Money

Principles of Economics

Kathy Anderson

February 2012

Money acts as a unit of account, medium of exchange or a store of value. In the following paper I will discuss what each of those three things means so let’s get started.

Money is considered a unit of account. What this means is that money is a measure of value. We use it every day for goods and services and it holds value because we are able to use it to get things we want or need.” Using money as the unit of account for prices also provides a measure of value--how much value buyers and sellers place on a good”. (Unit of Account) I use money every day for such things like making payments, buying groceries, and buying gas for my vehicles. It is a staple in our economy. Everything has a price or a value assigned to it and that is what a unit of account is.

Money is a medium of exchange. This means that we use money in exchange for product or service. I use money as a medium of exchange because it is readily acceptable for use in our country. Throughout history money has been considered anything that is acceptable to use in exchange for goods and services. I use money in exchange for such things like the hairdresser or the movies I go to see. I exchange money for items on e-bay as well.

Money is a store of value. What this means is that we place value on money. We can spend it or save it for a rainy day. We can invest it or donate it. It creates value because it means it is worth something to us to have it to use. We try to do things with our money that increases the value and things in order to not lose value. I personally have a savings account and am currently working to save money to open a new business someday. If I have the money in the bank it draws interest and keeps me from spending it on things I do not need.

Bibliography

Unit of Account. (n.d.). Retrieved 2 19, 2012, from AmosWEB Encyclonomic WEB*pedia:...