Which of the following is a function of money?
A)a means of reducing transactions costs
B)tool for barter
C)a medium of exchange
D)a measure of liquidity
E)a means of pooling risk

Question

Quizplus · Accepted Answer

The function of money as a medium of exchange is its most important role. It allows for the efficient exchange of goods and services without the need for bartering or direct exchange. Money helps to eliminate the double coincidence of wants problem that arises in barter trade, where one person has to have something the other person wants, and vice versa. Money also reduces transactions costs in the economy, but this is a secondary function. Pooling risk and measuring liquidity are not functions of money.

Which of the Following Is a Function of Money