Unit Of Account

Unit Of Account

One of the major concepts of money that says that a certain amount of money should be consistent over time. For example, $1 is always $1 – you would not go into the store tomorrow and they would tell you that your dollar from yesterday is worth only $0.50 today. While the value of what the dollar itself can purchase may change, the amount dollar itself does not. A counterexample would be a barter economy – trading a sea shell one day may be worth radically different things tomorrow, with no consistency.

Return To Glossary