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The Economics of Money

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Questions and Answers

How is money defined by economists?

Money is defined by its function, such as serving as a unit of account. (correct)

Money is defined by its form, such as coins or paper.

Money is defined by its scarcity, such as limited supply.

Money is defined by its value, such as gold bars.

What is the meaning of "generally accepted" in the definition of money?

Money is accepted only by a select group of people.

Money is accepted by everyone in society.

Money is accepted based on its physical appearance.

Money is accepted based on social customs and conventions. (correct)

What are the three basic functions of money in an economy?

Serving as a medium of exchange, a measure of demand, and a unit of investment.

Serving as a medium of exchange, a store of value, and a unit of account. (correct)

Serving as a medium of exchange, a measure of inflation, and a unit of labor.

Serving as a medium of exchange, a measure of wealth, and a unit of production.

What determines what actually constitutes money in a society?

What people in the society are generally willing to accept as money. Signup and view all the answers

How does money evolve in an economy?

Through changes in social customs and conventions. Signup and view all the answers

Money is defined more by its ______ than by its form

function Signup and view all the answers

Money is anything that is generally accepted in payment for goods and services and for the repayment of ______

debts Signup and view all the answers

Money performs three basic ______ in an economy

functions Signup and view all the answers

Money serves as a unit of ______

account Signup and view all the answers

Money serves as a medium of ______

exchange Signup and view all the answers

What is the social convention that determines what constitutes money in a society?

The social convention that determines what constitutes money in a society is what people in the society are generally willing to accept as money. Signup and view all the answers

Explain the three basic functions of money in an economy.

The three basic functions of money in an economy are: (1) serving as a unit of account, (2) serving as a medium of exchange, and (3) serving as a store of value. Signup and view all the answers

How is money defined more by its function than by its form?

Money is defined more by its function than by its form because it is determined by what purposes it serves (such as being generally accepted in payment for goods and services) rather than by its physical characteristics (such as being in the form of coins or paper). Signup and view all the answers

What does the term 'generally accepted' mean in the definition of money?

The term 'generally accepted' in the definition of money means that money is largely a social convention and its acceptance depends on what people in a society are generally willing to accept as money. Signup and view all the answers

How does money evolve in an economy?

The evolution of money in an economy involves changes in what people consider as acceptable forms of money over time, influenced by social, economic, and technological factors. Signup and view all the answers