Suppose you have a collection of gold coins from the 19th century. Com

Suppose you have a collection of gold coins from the 19th century. Comment on their suitability to provide for you each of the three functions of money.

What will be an ideal response?

ANSWER

The coins are an exceptional store of value. They would serve well as a medium of exchange, eagerly accepted by most people. They are a poor unit of account, since their value fluctuates a great deal relative to other goods. The face value of the coins is not a reliable indicator of their worth relative to other goods. This is because they are valued primarily as a store of value (and historical/artistic artifacts), rather than as a medium of exchange.