The figure given below represents the PPC in two nations

Question

The figure given below represents the PPC in two nations - Germany and Korea, producing only two goods, cars and food.Figure 2.4
 
-Most markets involve the use of money for transactions because:
A)goods and services can be exchanged more easily with money than without it. 
B)goods and services cannot be exchanged without money. 
C)using money requires a double coincidence of wants. 
D)the transaction costs of using money are very high. 
E)the value of money remains same across countries over time.

Quizplus · Accepted Answer

Money is widely used in markets because it facilitates exchange by providing a medium of exchange that can be used to purchase any good or service. This is much easier than the barter system, which requires a double coincidence of wants (i.e. both parties must want what the other has to offer) in order to conduct a trade. While barter systems were used in the past, they are inefficient and make it much harder to conduct transactions than using a common currency. The transaction costs of using money are therefore much lower than using barter systems, making money a more efficient and convenient medium of exchange. Additionally, the value of money may fluctuate across countries and over time, but this does not negate its usefulness as a medium of exchange.