If you are estimating the amount you plan to spend on a vacation, money is serving as a
A) unit of account.
B) store of value.
C) defense against inflation.
D) medium of exchange.

Question

Quizplus · Accepted Answer

Money is serving as a "unit of account" when estimating the amount to be spent on a vacation because it is being used as a common denominator to express the value of the spending in a way that is easily understood (e.g. $100 for a hotel room, $50 for meals, etc.). This is different from the other functions of money such as a "store of value" (saving money for future use), "defense against inflation" (using money as a hedge against inflation through investments), or "medium of exchange" (using money to buy and sell goods and services).

If You Are Estimating the Amount You Plan to Spend