CFA Level I · CFA Level I Exam · Monetary Policy
Which function of money is best described by its use as a common unit for quoting prices of goods and services, so that relative prices can be compared easily?
This is the unit of account function. Money provides a common yardstick in which prices are quoted, so relative prices can be compared easily. Medium of exchange is about settling trades, and store of value is about preserving purchasing power over time.
- AMedium of exchange
- BUnit of accountCorrect
- CStore of value
Explanation
Acting as a common measuring unit for prices is the unit of account function. Medium of exchange concerns settling transactions, and store of value concerns holding purchasing power over time.
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