IAI Actuarial Core Principles · Business Economics · Role of money and interest rates in the economy
Prices of flats in a city are quoted in rupees, allowing a buyer to compare a ₹80 lakh flat with a ₹65 lakh flat and a ₹5 lakh car. Which function of money does this primarily show?
This shows money as a unit of account. Quoting every price in rupees gives a common measure, so buyers can compare the values of dissimilar items such as flats and cars without having to work out many relative barter ratios.
- AStore of value
- BMedium of exchange
- CUnit of accountCorrect
- DStandard of deferred payment
- Legal tender status
Explanation
Quoting and comparing the prices of different goods in a single common measure is the unit of account function. No exchange or saving is described, so the other functions are not the main one shown.
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