Question

What is something other than the central bank that is capable of creating something that is "generally accepted in payment for goods?"

Answer 1

• Anything that is generally accepted as a means of payment for goods is money.
• Money is any item which is generally accepted as payment and repayment of debts such as taxes.
• The three main functions of money are medium of Exchange,a unit of account and a store of value.

Medium of Exchange:-

Money is accepted as a medium of Exchange as it can be exchanged for goods and services.Hence money represents standard of value by all the citizens.

Unit of account;-

Money is considered as a unit of account as it can be used to value goods and services, accounted and compared with value of goods and services.

Store of value:-

The third main function of money is the store of value as money can be saved, retrieved and exchanged for goods and services at a different point of time.

As money is called the store of value, it is tradable.