Functions of Money

The three functions of money are as follows:

• Unit of account, medium of exchange, and store of value

• Unit of account, measure of profit, and store of value

• Medium of exchange, measure of profit, and store of wealth

• Store of value, medium of exchange, and measure of wealth

Money serves as a medium of _______.

• exchange

• payment

• store

• value

Which of the following is a function of money?

• Medium of exchange

• Source of income

• Method of production

• Tool for investment

What is required for money to be considered a medium of exchange?

• It must be accepted as payment for goods and services.

• It must be made of gold.

• It must be issued by a government.

• It must be digital.

M&Ms cannot be considered money if no one is willing to accept them as payment for goods and services because they are not universally accepted as a medium of exchange.

• They are not universally accepted as a medium of exchange.

• They are made of candy, not paper money.

• Their value fluctuates too much.

• They are too sweet to be money.

What is a good standard of value according to the text?

• Gold

• Money

• Barter

• Goods

Money is considered a good measure of value because it is widely accepted in exchange and is easily divisible, durable, and portable.

• It is widely accepted and easily divisible, durable, and portable.

• It is printed without any restrictions.

• It is backed solely by gold and other precious metals.

• It has no intrinsic value and is arbitrarily assigned.

Finally, money must be a ________ of value.

• store

• measure

• medium

• waste

What is liquidity?

Fill in the blank: A savings account is more ______ than a house.

• savings account

• bank

• investment account

• checking account