Question

Tim 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, Tim buys the computer and writes a check for $1,299. Identify what role money plays in each of the following parts of the story. Hint: Select each role only once. Role of Money Medium of Exchange Unit of Account Store of Value Tim has $1,537 in his checking account. Tim writes a check for $1,299. Tim can easily determine that the price of the computer is more than the price of the vacation.

Answer 1

Answer:

Role of Money in Each Part of the Story:

1. Tim can easily determine that the price of the computer is more than the price of the vacation = Unit of Account

2. Tim has $1,537 in his checking account = Store of value

3. Tim writes a check for $1,299= Medium of Exchange

Explanation:

Money is countable and can be used to value exchanges and calculate profits and losses, income and expenses, and debts and wealth.  It can also be stored currently, retrieved at a later date, and exchanged for value in the future without significant loss of value.  Money facilitates transactions between parties.