Question

Until $1946$, residents of the island of Yap used large doughnut-shaped stones as financial assets. Although prices of goods and services were not quoted in terms of the stones, the stones were often used in exchange for particularly large purchases, such as livestock. To make the transaction, several individuals would insert a large stick through a stone's center and carry it to its new owner. A stone was difficult for any one person to steal, so an owner typically would lean it against the side of his or her home as a sign to others of accumulated purchasing power that would hold value for later use in exchange. Loans would often be repaid using the stones. Which of the functions of money did the stones perform?

Short answer

Money is any medium that is generally accepted by both sellers and creditors in an economy.Stones are being used as money in the process of the various pressure.

Step-by-step solution

Step: 1 Introduction:

Money is any medium that is generally accepted by both sellers and creditors in an economy.There are four basic activities.

Step: 2 Basic activities:

Mode of exchange: This refers to any item that is accepted as payment by vendors.

Accounting unit: This is a unit of measurement used to express prices. This is also the commonality of the market process, which is a fundamental attribute of money.

A purchasing or value store:Power is a necessary attribute of money since it allows it to keep its worth through time.

A benchmark of differential payment: This refers to a quality of an object that makes it attractive for use as a method of determining future debt maturities.

Step: 3 Stone functions:

Stones are used as a form of payment: Stones are frequently used as a form of payment for significant transactions. As a result, in market transactions, the seller will take it as payment.

Rocks as a measure of value: Stones also serve as a reserve currency, which is an essential function. It is stored safely as a symbol of accumulating purchasing power that will be worth something in the future.

Stones as a deferred payment standard: Stones are frequently used to repay loans. As a result, stones are thought to be suitable for laying debts that would mature in the future.

As a result of the aforementioned factors, stones can be used as money.