money what are the 3 functions of money and which is the most important?
Post on 31-Mar-2015
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MoneyWhat are the 3 functions of money and which is the most important?
Characteristics of Money
1.Durability-not easily destroyed
2.Portability-easy to carry and transfer
3.Divisibilty-easily divided into smaller amounts
25/5=5
4. Uniformity-all forms of money look similar
5. Limited Supply-the Federal Reserve limits the amount of money in circulation
6. Acceptability-everyone can exchange it for goods and services
Source of Money’s value
Fiat Money- Money that has value because the government has ordered that it is an acceptable means to pay debts
Functions of Money
1.Medium of Exchange-anything that is used to determine value during the exchange of goods and services
2. Unit of Account-means for comparing the values of goods & services
3. Store of Value-keeps its value if you save it
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