The medium of exchange function of money allows an economy to avoid the problem of:
A) lack of a double coincidence of wants.
B) unemployment.
C) loss of purchasing power during an inflation.
D) rising interest rates.

Question

Quizplus · Accepted Answer

The medium of exchange function of money means that money can be used to buy goods and services, which eliminates the need for a double coincidence of wants (when two parties have goods or services that the other wants, and they are willing to exchange them). Therefore, with the medium of exchange function of money, an economy can avoid the problem of lack of a double coincidence of wants.

The Medium of Exchange Function of Money Allows an Economy