When money is accepted as payment in a market transaction,it is functioning as
A) a factor that shifts the aggregate production function
B) the velocity of circulation.
C) a medium of exchange.
D) the real interest rate.

Question

Quizplus · Accepted Answer

Money serves as a medium of exchange in market transactions. It is used to facilitate the exchange of goods and services between buyers and sellers. Factors that shift the aggregate production function, such as changes in technology or capital stock, are not related to the use of money in transactions. Velocity of circulation refers to the speed at which money changes hands, but it is not the same as the function of money as a medium of exchange. The real interest rate relates to the cost of borrowing money, but it is not directly related to the function of money in market transactions.

When Money Is Accepted as Payment in a Market Transaction,it