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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.

Respuesta :

Answer:

medium of exchange

store of value

unit of account

Explanation:

Money is a valuable commodity and a medium of exchange. Modern economies use flat money that is not a community nor backed by the economy.

What do you mean by money as a medium of exchange?

Money is a medium of exchange; allows people to get what they need to live. Trade was one of the exchanges of goods before money was created.

Like gold and other precious metals, money is a valuable commodity because to many people it represents something valuable.

About inflation, it leads the rise in prices and services and is a reason of the production of goods and services also gets affected in the economy.

Hence, Inflation affects the flow of money in the economy by reducing the purchasing power of clients.

To learn more about money as medium of exchange, refer:

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