If you shop for a car online and compare car prices across dealerships, money is functioning as a A. medium of exchange. B. means of payment. C. barter mechanism. D. store of value. E. unit of account.
The correct answer and explanation is:
The correct answer is E. unit of account.
Explanation: When you compare car prices across dealerships, money is acting as a unit of account, which is one of the primary functions of money. A unit of account is a standard numerical unit of measurement that provides a consistent measure of value, allowing individuals to compare the prices of goods and services. In this case, money is being used to express the value of cars at different dealerships, making it easier to compare and evaluate the prices. This helps consumers make informed purchasing decisions, as they can easily identify which dealership offers the best price for the car they are interested in.
The medium of exchange refers to the role of money in facilitating transactions, where money is used to buy goods or services. While money is also a medium of exchange when purchasing a car, the specific activity in the question—comparing car prices—is related to the function of money as a unit of account.
The means of payment is closely related to the medium of exchange but emphasizes the process of paying for goods and services once a transaction has been agreed upon. A barter mechanism refers to direct exchanges of goods and services without the use of money. The store of value refers to the function of money to retain its value over time, allowing it to be used for future transactions.
Thus, in the context of comparing car prices across dealerships, money serves as a unit of account, providing a common measure of value that enables price comparisons.