The Mother Of Economy Practice Test

Which statement best defines a unit of account?

A store of value A measurement used to price goods and perform economic calculations A medium of exchange A symbol of wealth

Correct Answer:

A measurement used to price goods and perform economic calculations

Explanation:

Unit of account is the function of money that provides a common numerical measure for valuing goods and services and for performing economic calculations. It lets us price items, compare values, and keep accounting records in a consistent way across the economy. For example, a coffee priced at $3 or a monthly salary of $2,000 rely on money serving as a unit of account. This differs from storing value over time (store of value) or facilitating transactions (medium of exchange). Being a symbol of wealth isn’t a formal monetary function, so it doesn’t define unit of account.

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