Money performs its function in three ways. For each of the following situations, identify and explain...

Money performs its function in three ways. For each of the following situations, identify and explain the ONE unique and particular function of money that is being emphasized:

John expects to be laid off in two months. He needs to have access to a rainy day fund and decides to increase the balance in his savings account.

Jeremiah wants to compare the value of movie tickets and DVDs, and checks the price of each of these goods as quoted in US dollars.

Ashley accepts money for performing her daily tasks as a paralegal at a law firm. She needs to use that money to buy goods and services.

Solutions

Expert Solution

Mainly there are three functions perform by the money

Medium of exchange

Store of value

Unit of account

A) In this statement, John is expecting to be out from the workplace within two months. He needs fund to have good funding in rainy days. Therefore, he saves money in the saving account. Here, money works as store of value. With the stored value John can have help in difficult time period. Here , money has precautionary motive.

B) Jeremiah wants to compare the value of movie tickets and DVDs, and checks the price of each of these goods as quoted in US dollars. Here money functions as unit of account. Money is a unit of account. Money works as Yardstick; we use the value of economic transaction.

C) Ashley accepts money for performing her daily tasks as a paralegal at a law firm. She needs to use that money to buy goods and services. Here money serves as medium of exchange .Here , money is used to buy goods and services. Here , money has transactive motive .

Rahul Sunny answered 3 months ago

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