Question

QUESTION 7

1. Money is any commodity or token that is

   		issued by the government.
   		generally accepted as a means of payment.
   		generally accepted as a means of measurement.
   		a store of value.

2 points   

QUESTION 8

1. The functions of money are

   		medium of exchange, unit of account, and store of value.
   		medium of exchange, the ability to buy goods and services, and checking accounts.
   		medium of exchange, the ability to buy goods and services, and the ability to pay off debts.
   		store of value, use as a barter mechanism, and unit of account.

2 points   

QUESTION 9

1. What is a problem with barter that makes it so difficult to use?

   		Individuals have to produce something to trade with.
   		Barter is very efficient but illegal because it avoids taxation.
   		Barter requires a double coincidence of wants.
   		Barter omits the store of value role for money.

Answer 1

Q 7. generally accepted as a means of payment.

Monry is that token that must have general acceptability. No one can refuse to accept money as payment once it is declared as money.

Q 8. medium of exchange, unit of account, and store of value.
Money functions as a medium of exchange that can be exchanged for any commodity or service; money as a unit of account is divisible, countable and fungible; and as store of value money can be saved, retrieved and later exchanged.

Q 9. Barter requires a double coincidence of wants.

In order to exchange some commodity it is important that one should find someone who wants what a person has in return. For example, If A wants rice and has a buffalo to exchange, B should have rice to give and want a buffalo in return for his rice.