CFA Level I · CFA Level I Exam · Monetary Policy
Which function of money is most likely being served when a firm quotes all of its product prices in a single currency so that buyers can compare them easily?
Quoting all prices in one currency is the unit of account function. Money serves as a common measuring standard, letting buyers compare the relative prices of different goods easily. It differs from medium of exchange, which is about settling payments, and from store of value, which is about holding purchasing power.
- AStore of value
- BUnit of accountCorrect
- CMedium of exchange
Explanation
Quoting prices in one currency gives a common yardstick for comparing the relative worth of goods and services, which is the unit of account function. Medium of exchange concerns settling transactions, and store of value concerns preserving purchasing power over time.
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