According to the U.S. Secret Service, approximately $2.6 billion of U.S. paper currency in circulation is counterfeit. Undetected counterfeit currency which is spent and circulated in the marketplace is an example of the counterfeit currency being used as a
A) medium of exchange.
B) commodity money.
C) store of value.
D) bank reserve.

Question

Quizplus · Accepted Answer

Counterfeit currency being used and circulated in the marketplace indicates that it is being treated as a medium of exchange, which is one of the three functions of money. Commodity money refers to money that has intrinsic value, such as gold or silver. Store of value refers to holding money for future use or investment, and bank reserves refer to the money banks hold to meet customer demands for withdrawals or reserves required by regulatory authorities.