Money serves three functions in the economy: medium of exchange, unit of account, and store of value.For each of the following statements about inflation, indicate which function of money inflation is hindering.StatementStore of ValueUnit of AccountMedium of ExchangeInflation erodes money's purchasing power. Inflation causes menu costs. In some countries with hyperinflation, prices are posted in terms of U.S. dollars rather than the local currency, even though the local currency is still used to purchase the good.

Inflation is the increase in general price level. Due to inflation purchasing power decreases and…

Answered: Statement Store of Value Unit of…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Money serves three functions in the economy: medium of exchange, unit of account, and store of value.

For each of the following statements about inflation, indicate which function of money inflation is hindering.

Statement	Store of Value	Unit of Account	Medium of Exchange
Inflation erodes money's purchasing power.
Inflation causes menu costs.
In some countries with hyperinflation, prices are posted in terms of U.S. dollars rather than the local currency, even though the local currency is still used to purchase the good.

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