Money serves three functions in the economy: medium of exchange, unit of account, and store of value. Which of the following statements describes how inflation affects the ability of money to serve as a unit of account? Check all that apply. Inflation causes menu costs. Inflation erodes money's purchasing power. In some countries with hyperinflation, 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.

In some countries with hyperinflation, 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.

Explanation:

The inflation that cause menu cost and the hyperinflation would be treated as a unit of account because for menu cost, the seller have to change the cost because of changing in the price

On the other hand, because of the difference in the currencies, inflation would create a problem for measuring the currency units

And, the left one would be represent the store of value as the value of the money would be decrease when the inflation rate is increased

bratislava bratislava · Answer 2 · 2021-11-23T11:09:33+01:00

Money has three functions unit if accounts, storm of values and a medium of exchange. Modern economies use flat money that is not a community nor backed by the economy.

The inflation depicts the rise in procs and services and is a reason of the produces of goods and services in the economy. Inflation affects money by reducing the purchasing power of clients.

Hence the option B is correct.

Learn more about the serves three functions in the economy: medium of exchange.

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