Without money to act as a medium of exchange,
A)the standard of living in the economy would increase.
B)barter exchange would allow for a much simpler yet increased standard of living.
C)the increased transactions costs associated with trading would prohibit some trades from taking place.
D)independence in production would lead to a proliferation of new products.
E)all exchanges that take place under a monetary system would still take place.

Question

Quizplus · Accepted Answer

Money serves as a medium of exchange, which reduces the transaction costs associated with trading goods and services. Without money, individuals would have to resort to barter exchange, which can be cumbersome and time-consuming. This increased difficulty in trading would prohibit some trades from taking place, which would decrease the number of possible exchanges and limit economic growth. Therefore, choice C is the best answer.

Without Money to Act as a Medium of Exchange