Question

The roles of money Larry just graduated from college and is now in the market for a new car. He has saved up $4,000 for a down payment. He's deciding between a Super and a Duper. The Super is priced at $23,599, and the Duper is priced at $18,999. After agonizing over the decision, he decides to buy the Duper. He writes the dealership a check for $4,000 and takes out a loan for the remainder of the purchase price. 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 Larry writes a check for $4,000. Larry can easily determine that the price of the Super is more than the price of the Duper. Larry has saved $4,000 in his checking account.

Answer 1

Answer and Explanation:=

Medium of exchange -  It is used to enable the sale and purchase between the parties. It represents the standard of value that is necessary to accept all the parties.

Larry writes a check for $4,000. It is a medium of exchange because it shows trade of goods between Larry and the car seller.

Unit of account - It gives permission to do the differentiation between two things.

Larry can easily differentiate the price of the super is more than the price of duper. It is unit of account because he knows the value of the super and duper.

Store of value - It is the value that can be saved and exchanged for a long time period.

Larry has saved checking amount is $4000. It  is store of value because it is saved amount.