Question

On the island of Mabera, the local money is called "favoli." The price of every good in Mabera is expressed as the number of favolis needed to buy the good. The use of favolis to express the price of goods describes which function of money?

Answer 1

Answer:

The correct option is Unit of account

Explanation:

One of the functions of money is Unit of accounts in economics. The worth of an object is measured in a distinct currency. One of the downfalls of unit of account is that it is regarded as the steady unit of account but inflation factor devastate the said assumption that money is steady. It is regarded as the basic property of the money.

Thus, the correct option will be Unit Of Account.

Answer 2

Medium of exchange

Explanation:

Favoli works as “medium of exchange” on the island of Mabera.

Explanation- “Medium of Exchange” refers to the property of money by which it increases the interaction between the buyer and a seller. On the island of Mabera, every commodities price is expressed in the count of Favoli. There-by it means Favoli forms a medium of common exchange where any commodity can be converted into equivalent units of Favoli and vice-versa.

This is the most common use of money and it can be seen as the evolution over the traditional barter system which suffers from the “lack of wants”.