Money as a unit of account

Money can be used as a unit of account, because it has a number of important properties:

• it is possible to divide a certain amount of money in smaller units, while the total does not lose any of it's value. In daily life this means that 10 banknotes of 10 dollar have the exact same value as one banknote of 100 dollar.
• it is interchangeable: any 10 dollar banknote has the exact same value as any other 10 dollar banknote.

These two properties are also of great importance when money is used as a medium of exchange. When someone performs a service for 10 people, and receives 10 dollars from each client, these 10 payments of 10 dollar can be used to buy goods or services elsewhere for the total of 10 x 10 equals 100 dollar. By using money as a unit of account, the value of two products or services can be compared.

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