In 2010, Tara used $50,000.00 from funds she had invested in certificates of deposit as a down payment to buy a house. What function did this portion of her investments serve when she made the down payment?

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Business

Sariah

21 May, 05:30

In 2010, Tara used $50,000.00 from funds she had invested in certificates of deposit as a down payment to buy a house. What function did this portion of her investments serve when she made the down payment?

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Julia Case · Answer 1

Medium of exchange

Explanation:

Money is an object that is collectively and legally accepted as payment for goods and services. Money has three major functions as follows;

1. Medium of exchange

This is when money is used as an intermediate in the exchange of goods and services. When one decides to exchange one good or service for the other, the monetary value of these goods and services are determined and thus the purchase can be made knowing what value one is exchanging for the other.

2. A unit of account;

This is a standard numerical unit measurement of market value of goods and services. The market value of the goods and services are first determined. Then the goods or services are broken down into a unit of a good or services. The value per unit is then determined.

3. A store of value

For money to act as a store of value, the value of money has to be stable over time. This means that it has to be effectively stored. It also has to be reliably saved and retrieved.

In Tara's case, money served as a medium of exchange since she used a monetary value of $50,000 in the form of certificates of deposit to pay for a down payment to buy a house.