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Difficulty: MediumMeaning, Functions, and Characteristics of Money

Money serves as a standard of deferred payment when it acts as the common unit used to express and compare the current market prices of different goods and services.

Answer: Answer

Answer

False. Expressing and comparing current prices of goods and services describes the 'unit of account' function of money, whereas the 'standard of deferred payment' refers to settling future debts and credit transactions.
The statement is false because measuring and comparing the relative monetary values of goods and services is the 'unit of account' function. The 'standard of deferred payment' function specifically concerns facilitating credit sales and deferred financial contracts.

Step-by-Step Solution

1
Identify the specific function of money described in the statement (expressing and comparing current market prices).
The function that acts as a measure of value for pricing goods is the 'unit of account'.
Unit of account provides a common metric for pricing and financial record-keeping in current transactions.
2
Define the 'standard of deferred payment' function of money.
The standard of deferred payment allows financial obligations to be created today and settled at a specified future date.
This is a secondary function enabling deferred trade, loans, and credit sales.
3
Compare the function in the statement with the actual definition of standard of deferred payment.
The statement misattributes the primary function of unit of account to the secondary function of standard of deferred payment.
Because the statement confuses current price valuation with future debt settlement, it is logically false.

Key Concept

Distinction between Primary (Unit of Account) and Secondary (Standard of Deferred Payment) Functions of Money
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Topics

Meaning, Functions, and Characteristics of Money

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