3.2.5.1 Functions of money

• Money as a medium of exchange eliminates the need for barter.


  True
• Money allows the economy to function more smoothly compared to a barter system.

  True
• Scarcity ensures that money maintains its value as a store of value.

  True
• Why is using money as a medium of exchange more efficient than barter?

  Reduces complexity and time
• Acceptability of money is essential for its effectiveness in transactions.

  True
• What is the double coincidence of wants in a barter system?

  Finding someone who wants what you have
• The unit of account function of money allows prices to be compared across the economy


  True
• Money is a medium of exchange that is generally accepted
• Order the key characteristics of money based on their importance to its effectiveness:

  1️⃣ Acceptability

  2️⃣ Scarcity

  3️⃣ Durability

  4️⃣ Divisibility

  5️⃣ Portability
• The medium of exchange function eliminates the double coincidence of wants


  True
• The unit of account function allows prices to be compared across different goods and services


  True
• Money is a medium of exchange that is generally accepted as payment for goods and services
• Match the function of money with its description:

  Unit of Account ↔️ Provides a common measure of value

  Store of Value ↔️ Retains purchasing power over time
• Money is portable, meaning it is easy to carry and transport
• Arrange the following steps to illustrate the use of money as a medium of exchange:

  1️⃣ Customer wants groceries

  2️⃣ Customer pays with money

  3️⃣ Store accepts money for goods

  4️⃣ Transaction is completed
• Money as a unit of account provides a common measure for the value of different goods and services
• Match the benefit of using money as a medium of exchange with its drawback in a barter system:

  Efficiency ↔️ Requires double coincidence of wants

  Standardized Transactions ↔️ Prices are not standardized
• The store of value function of money relies on its scarcity
• Match the function of money with its description:

  Medium of Exchange ↔️ Facilitates transactions without barter

  Unit of Account ↔️ Provides a common measure of value
• Money is considered portable because it is easy to carry and transport


  True
• Scarcity ensures that money maintains its value
• The store of value function allows individuals to accumulate wealth
• The standard of deferred payment allows individuals to borrow and repay amounts over time