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Is money a store of value?
No, because the value of money depreciates with inflation.
What functions of money would be violated if inflation were high?
store of value
Money serves as a good store of value except when an economy experiences a period of .?
...inflation
Why does the value of money fall when there is inflation?
"Inflation" is defined as an increase in the overall level of prices over an extended period of time. Or in other words Inflation occurs when the supply of money far exceeds the supply of goods and services. The functions of money are to serve as a medium of exchange, a unit of account, and a store of value. Inflation mainly affects the ability of money to serve as a store of value, since inflation erodes money's purchasing power, making it less attractive as a store of value. Money also isn't as useful as a unit of account when there's inflation, because stores have to change prices more often and because people are confused and inconvenienced by the changes in the value of money. Any inflation affects this function of money and obliges us to make the distinction between nominal and real prices, for example when looking at GDP figures. Inflation often makes the financial performance of companies and investments more difficult to judge. It is easy to see an increase in nominal profit and judge that to be a good result whereas, in fact, real profit has declined.
A drastic drop in the value of money coupled with a rise in prices?
When there is an increase in prices for good and services combined with a reduction in the value of money it is known as inflation.
Is money a store of value?
No, because the value of money depreciates with inflation.
What functions of money would be violated if inflation were high?
store of value
Money serves as a good store of value except when an economy experiences a period of?
hyperinflation, where the value of money decreases rapidly, making it a poor store of value. Hyperinflation erodes purchasing power, leading people to lose confidence in the currency and turning to alternative stores of value, such as foreign currencies or commodities. Governments may also need to issue new, more stable currencies to restore trust in the financial system.
Money serves as a good store of value except when an economy experiences a period of .?
...inflation
Why does the value of money fall when there is inflation?
"Inflation" is defined as an increase in the overall level of prices over an extended period of time. Or in other words Inflation occurs when the supply of money far exceeds the supply of goods and services. The functions of money are to serve as a medium of exchange, a unit of account, and a store of value. Inflation mainly affects the ability of money to serve as a store of value, since inflation erodes money's purchasing power, making it less attractive as a store of value. Money also isn't as useful as a unit of account when there's inflation, because stores have to change prices more often and because people are confused and inconvenienced by the changes in the value of money. Any inflation affects this function of money and obliges us to make the distinction between nominal and real prices, for example when looking at GDP figures. Inflation often makes the financial performance of companies and investments more difficult to judge. It is easy to see an increase in nominal profit and judge that to be a good result whereas, in fact, real profit has declined.
How did inflation affected the Roman Empire?
inflation happens when money loses its value and it affected the Roman Empire.
What does it mean by money loses value isn't money money?
Money can lose value by inflation or gain value through deflation.
A drastic drop in the value of money coupled with a rise in prices?
When there is an increase in prices for good and services combined with a reduction in the value of money it is known as inflation.
What can erode the value of money over time?
Inflation can erode the value of money over time.
What is it called when the value of money goes down?
inflation
The present value of a perpetuity decreases when what decreases?
When the value of money decreases (inflation)
Explain how inflation affect the function of money?
Inflation is defined as a persistent increase in general price level. Inflation is measured by the proportional changes over time in some appropriate price index, commonly a consumer price index. General Price level refers to an average of all price in an economy and changes in reflect in the cost of living.Inflation however affects many thing one being function of money such as medium of exchange, store of value, unit of account and standard of deferred payments.Medium of exchange means that any item that is widely acceptable in exchange of goods and services. The existence of a medium allows trade to take place without the need for a joint coincidence of wants. A medium of exchange facilitates economic transactions. As long as the same money is going to be accepted as payment, inflation will not affect this function. But in extreme cases of inflation, people may lose confidence in money to the extent that they don't trust it, and resort to barter or some other means of conducting transactions.Another function of money is store of value. If asset prices are stable, money is unattractive as a store of value, as it brings in no income, but if asset prices are unstable it may be worth holding some part of total assets in money, as a safeguard against risk. This is the one that inflation obviously affects the most. Inflation erodes the value of money; it does not keep its value. Something that costs a certain amount today will cost more tomorrow. This affects everything from the timing of transactions to the amount required for future payments (interest rates).One of the roles of money is to be the unit of account in which contracts are expressed and individual incomes or firms' profits are measured. High and fluctuating rates of inflation interfere with the performance of money as a unit of account, which is believed to be bad for the efficiency and equitable running of the economy.
