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medium of exchange unless it also serves as a store of value. Is this statement t

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Money cannot serve as a medium of exchange unless it also serves as a store of value. Is this statement true or false? Explain.

Expert Solution

Step 1

The money is used as the medium of exchange and store of value. Money is used as unit of account as well. Money has overcome problems associated with the barter system. The change in the money supply affects the value of money. Rise in the money supply often reduces the money value.

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