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Functions and Characteristics of Money

Functions and Characteristics of Money. What are the Functions of Money?. 1) Medium of exchange – accepted as payment for goods and services 2) Measure of value/Unit of Accounting – Worth in terms (U.S. uses $)

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Functions and Characteristics of Money

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  1. Functions and Characteristics of Money

  2. What are the Functions of Money? • 1) Medium of exchange – accepted as payment for goods and services • 2) Measure of value/Unit of Accounting – Worth in terms (U.S. uses $) • 3) Store of value – can be converted into money, which easily stored until future time (work first, then get paid)

  3. Characteristics of Money • Portability – easily transferred from one person to another • Durability – lasting; won’t wear out • Divisibility – break down into smaller units; use whatever amount in any transaction • Limited Availability – Available; but in limited supply • Loses value if too much in circulation (inflation)

  4. Characteristics of Money • Accepted – medium of exchange • Stable in Value – cannot change rapidly

  5. What gives MONEY value?

  6. Is U.S. Currency backed by gold or silver?

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