Definition, Measurement, and Functions of Money

Match

Match the following functions of money with their correct descriptions.

• Facilitates exchange but does not communicate effectively

• 
  Measures and compares the value of goods and services

• Money is used to preserve or save purchasing power for future consumption

Medium of Communication

Unit of Account

Store of Value

• 
  Medium of Communication

• 
  Unit of Account

• Store of Value

Multiple Choice

What does money as a 'Medium of Exchange' eliminate?

• The need for banks

• The use of credit cards

• The complications of bartering

• The requirement for loans

Multiple Choice

Which function of money involves using it to measure the value of goods and services?

• 
  Medium of Exchange

• Unit of Account

• 
  Store of Value

• Standard of Deferred Payment

Multiple Choice

What does liquidity refer to in the context of money supply?

• The interest rates associated with short-term loans

• The total amount of money in circulation

• The ability to convert something into cash easily

• The process of measuring money supply

Multiple Choice

What does the monetary base (M0 or MB) consist of?

• Currency in circulation and bank reserves

• Bank reserves and government bonds

• Currency in circulation and credit card transactions

• Currency in circulation and stock investments