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Medium of exchange and measure of value are functions of money - Leaving Cert Economics - Question 4 - 2015
Question 4
Medium of exchange and measure of value are functions of money. Explain each of the underlined terms and state one other function of money.
Worked Solution & Example Answer:Medium of exchange and measure of value are functions of money - Leaving Cert Economics - Question 4 - 2015
Step 1
Medium of exchange
Answer
A medium of exchange is an item that buyers give to sellers when they want to purchase goods and services. It facilitates transactions by eliminating the need for bartering and allows for more efficient trade. In this role, money serves as an accepted method of payment, simplifying exchanges in the economy.
Step 2
Measure of Value
Answer
The measure of value is the yardstick people use to post prices and record debts. Money enables a value or price to be assigned to goods and services, making it easier to compare their worth. This function helps consumers and producers make informed decisions based on the relative value of products.
Step 3