In a less-developed economy, cattle is widely accepted as payment for goods and services. Nearly all goods and services are priced in terms of cattle; however, cows vary in quality, become less valuable with age, and are difficult to move over long distances. Which of the following functions of money do cattle provide? Select the two correct answers.(1 point)

Question

Responses

store of value
store of value

unit of account
unit of account

uniformity
uniformity

medium of exchange
medium of exchange

portability

Answer 1

In the scenario described, cattle serve as a:

1. Unit of account - This is because goods and services are priced in terms of cattle, allowing people to compare the value of different goods and services.

2. Medium of exchange - Cattle are widely accepted as payment for goods and services, which means they function as a means for facilitating transactions.

While cattle may serve as a store of value to some extent, their varying quality, depreciation with age, and difficulty of movement limit their effectiveness in this role compared to more traditional forms of money. They are not uniform or particularly portable.

Therefore, the correct responses are "unit of account" and "medium of exchange."