ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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## Functions of Money

### Diagram Explanation

The diagram outlines the three primary functions of money, each connected to a specific characteristic that supports the function:

1. **Stores Value**  
   - Characteristic: "Shelf life, keeps longer than a banana"
   
   This indicates that money can preserve its value over time, unlike perishable goods.

2. **Medium of Exchange**  
   - Characteristic: "Makes it easier to trade"
   
   Money facilitates transactions between parties by acting as an intermediary in trade, simplifying the process compared to barter systems.

3. **Unit of Account**  
   - Characteristic: "Easy to count, divide and compare prices."
   
   Money provides a standard measurement of value across goods and services, enabling easier comparison and calculation. 

These functions are central to understanding how money operates within an economy, facilitating trade, value storage, and the pricing of goods and services.
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Transcribed Image Text:## Functions of Money ### Diagram Explanation The diagram outlines the three primary functions of money, each connected to a specific characteristic that supports the function: 1. **Stores Value** - Characteristic: "Shelf life, keeps longer than a banana" This indicates that money can preserve its value over time, unlike perishable goods. 2. **Medium of Exchange** - Characteristic: "Makes it easier to trade" Money facilitates transactions between parties by acting as an intermediary in trade, simplifying the process compared to barter systems. 3. **Unit of Account** - Characteristic: "Easy to count, divide and compare prices." Money provides a standard measurement of value across goods and services, enabling easier comparison and calculation. These functions are central to understanding how money operates within an economy, facilitating trade, value storage, and the pricing of goods and services.
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