As a Unit of Account, Money Is Used

question 209

Multiple Choice

As a unit of account, money is used

• A) to define prices of all other goods.
• B) to pay off future debts.
• C) to hold purchasing power over time.
• D) to exchange for goods and services.

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Definitions:

Stock of Money

The total quantity of money available in the economy at a particular time, including cash and deposits.

Price Level

A measure of prices in a given month or year in relation to prices in a base year.

Medium of Exchange

A mechanism or item used to facilitate trade by avoiding the limitations of barter, such as currency or digital forms of money.

MV Rises

A notation that can imply an increase in the velocity of money, which is the frequency at which one unit of currency is used to purchase domestically-produced goods and services within a given time period.