Unit of Account
Definition
A unit of account is a function of money that allows it to be used as a common measure for expressing the value of goods, services, and assets.
Analogy
Think of a unit of account like a ruler. Just as a ruler helps us measure the length or size of objects, a unit of account helps us measure the value or worth of things in terms of money.
Related terms
Medium of Exchange: It refers to money's ability to be used as a widely accepted method for buying and selling goods and services.
Double Coincidence of Wants: It is the situation where two parties have goods or services that the other party desires, allowing for direct exchange without using money.
Price Level: It represents the average level at which prices for goods and services are set in an economy.
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