Review: Money as a Medium of Exchange
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Questions and Answers

What characteristic of money distinguishes it from other types of assets?

  • Tangible value
  • Inflation resistance
  • Stability
  • Liquidity (correct)

    • What is the basis for goods and services that are paid on an installment basis?

  • Gold
  • Real estate
  • Stocks
  • Money (correct)

    • What measures the market basket of goods and services consumed by typical households?

  • Inflation Rate
  • Producer Price Index (PPI)
  • Gross Domestic Product (GDP)
  • Consumer Price Index (CPI) (correct)

    • What refers to the year-on-year rate of change of the monthly CPI after excluding food and energy items?

    <p>Core Inflation</p> Signup and view all the answers

    What is the annual rate of change in the Consumer Price Index (CPI) referred to as?

    <p>Inflation Rate</p> Signup and view all the answers

    What is the primary function of money as a medium of exchange?

    <p>Facilitating the exchange of goods and services</p> Signup and view all the answers

    How does money as a unit of account contribute to fair trade?

    <p>By valuing goods in terms of a monetary unit</p> Signup and view all the answers

    What is the advantage of using money as a unit of account?

    <p>Trade becomes fair since the value of goods is measured in terms of a monetary unit</p> Signup and view all the answers

    What does money eliminate the need for in terms of exchanging goods and services?

    <p>Double coincidence of wants</p> Signup and view all the answers

    How does the presence of money promote economic efficiency in transactions?

    <p>By reducing the time required for exchanging goods and services</p> Signup and view all the answers

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