BrainTok
ENESIT

Monetary Economics: Functions and forms of money · The Functions of Money

What money does (medium of exchange, unit of account, store of value, standard of deferred payment) and what makes something good at it.

Monetary Economics · 25 questions

Try 3 questions

1. Which three functions do economists classically assign to money?

  1. Medium of exchange, unit of account, store of value
  2. Source of income, measure of wealth, form of credit
  3. Means of saving, tool of taxation, sign of status
Show the answer

Answer: Medium of exchange, unit of account, store of value

Textbooks define money by what it does: it is used to pay, to price things and to carry purchasing power into the future.

2. A baker wants shoes, but the shoemaker wants fish, not bread. What barter problem does money solve here?

  1. The double coincidence of wants
  2. The lack of a written contract
  3. The absence of fair prices
Show the answer

Answer: The double coincidence of wants

Barter needs each side to want exactly what the other offers; a generally accepted medium of exchange removes that requirement.

3. Without money, an economy with 100 goods needs an exchange rate for every pair. How many rates is that?

  1. 10,000
  2. 4,950
  3. 100
Show the answer

Answer: 4,950

Each pair of goods needs its own rate: 100 x 99 / 2 = 4,950. With a unit of account, 100 prices are enough.

The rest of the quiz, a few questions at a time

BrainTok asks a few questions from quizzes like these before the apps you choose open, so your screen time turns into learning. For iPhone.

Join the beta

More Economics quizzes