18 Questions
What is the key function of money in an economy?
Facilitating transactions by providing a measured value
Which term describes a situation where there is a perfect alignment of needs between two parties in an exchange?
Coincidence of wants
What does the barter system entail?
Direct exchange of goods and services without money
In the context of the text, what is the role of money in the economy similar to?
Lubricant in machinery
How has money evolved from the barter system?
It has simplified the process of exchanging goods and services
What aspect does the relationship between supply and demand for money focus on?
Balancing the amount of money available with the need for it
What is one of the main reasons people decide to hold money?
To store value and have access to goods in the future
In early trading, what was typically exchanged in a barter system?
Items perceived to be of equal value
Why was the intrinsic value of money important historically?
To guarantee that the coin would be accepted
What function does money serve as when it acts as a medium of exchange?
Facilitator of trade
How did the evolution of money progress from defined weights of precious metals to coins?
Through formalization by states and merchants
Why did some merchants resort to using pictures to record trade exchanges?
To establish values and document trade exchanges
What is the primary function of money in an economy?
Facilitating exchange transactions
Which function of money addresses the issue of 'double coincidence of demand'?
Medium of exchange
What does money serve as when it provides a common unit of account for comparing the worth of goods and services?
Measure or standard of value
Which term refers to the use of money for present and future transactions, leading to its function as a store of value?
Store of value
In the context of money, what does 'measure' or 'standard' refer to?
Comparing the worth of different goods and services
Why is it necessary for an intermediary to be available in the exchange process as mentioned in the text?
To avoid the 'double coincidence of demand' problem
Explore the essential functions of money such as its role as a medium of exchange, measure of value, and store of value. Learn about how money facilitates exchange transactions and serves as a unit of account. Discover the significance of money as an item of worth and standard of deferred payment.
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