Which statement best illustrates the medium of exchange function of money?
A) You keep some money hidden in your sock drawer.
B) You have your house remortgaged for $500 000.
C) You use cash to buy a new tent for $250.
D) You borrow $500 from your parents for textbooks.

Question

Quizplus · Accepted Answer

Using cash to buy a new tent for $250 illustrates the medium of exchange function of money. Money serves as a medium to facilitate transactions between a buyer and a seller. In this scenario, the cash serves as a medium of exchange to transfer value from the buyer to the seller.

Which Statement Best Illustrates the Medium of Exchange Function of Money