Question

Sean wants to purchase a new computer and go to the Caribbean for spring break. The computer is priced at $1,299, and the vacation is priced at $750. He has only $1,537 in his checking account, so he cannot afford to purchase both. After much thought, Sean buys the computer and writes a check for $1,299. Identify what role money plays in each of the following parts of the story.

Answer 1

Answer:

Please see explanation.

Explanation:

a) Jake can determine computer price > vacation price:

Unit of Account

(Money being the standardized unit to measure price of 2 goods)

(b) Jake has $1574 in checking account

Store of Value

(Money is "Stored" in his bank account which can be used later for any purpose)

(c) Jake writes check for $1299

Medium of exchange

(Money is used to be exchanged with the computer)