Question

2.suppose the value pf the dollor decline relative to other currencies. how does the decline affect the three function of money.

3. does inflation, which is an increase in the price level, affect the three function of money? if so, how?

Answer 1

Money means anything of value that service generally medium of financial exchange legal tender for repayment of dept unit of accounting major standard of value and means to save our store purchasing power. There are few functions of money like store of value unit of account and medium of exchange.
A. Store of value include money is most liquid asset money is value can be retained overtime it is a convenient way to store wealth.
B. Unit of account include standard for measuring relative worth of goods and services
C. And medium of exchange include that it can be used for buying and selling good and services.if there were no money goods would have to be exchanged through the process of barter.

Due to decline of value of dollar function of money also change by There are a few factors which affects the demand for the currency. Say for example if a country is producing more goods and services and exporting it. Then the importers in foreign locations has to pay the domestic exporters in domestic currency. So demand for domestic currency goes up, and consequently value of domestic currency goes up. On the other hand if a country is importing more, then the domestic importers have to pay the foreign exporters in foreign currency. So demand for foreign currency goes up and value of domestic currency goes down when the importers sell domestic currency and buy foreign currency. So in short, if a country is exporting more than importing value of its currency goes up and if the country is importing more than exporting value of the currency goes down.