7. Problems and Applications Q7

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.

For each of the following statements about fnahon, indicate which function of money ination 1'5 hindering. Store of Unit of Medium of Statement Value Account Exchange Ination erodes money's purchasing power. Ination causes menu costs. In some countries with hyperination, 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