Question

State whether each condition is consistent with either a medium of exchange, a store of value, or a standard of value.

a) You put part of your paycheck into a 401(k) retirement plan.

• Standard of value

• Store of value

• Medium of exchange

b) You purchase an Amazon Echo.

• Medium of exchange

• Standard of value

• Store of value

c)  You notice that the price of a cafe latte, which you drink each morning on the way to work, increases by 50 cents.

• Standard of value

• Store of value

• Medium of exchange

d) You plan to purchase a new PlayStation4 but then realize what you would have to sacrifice to afford this new gaming systemÃ.

• Medium of exchange

• Standard of value

• Store of value

Answer 1

a) Here, the money is used as a store of value which will be available later in the life, It will be stored till then as a retirement plan.

b) Purchasing amazon Eco is using the money as a medium of exchange we have given money of the same value as the Eco.

c) As the price has increased we know it because we have set an standard of the price in terms of money we are paying, Its money used as standard of value.

d) Here, money is used a standard of value we are comparing two things in terms of money.