When Money Is Accepted as Payment in a Market Transaction,it

question 17

Multiple Choice

When money is accepted as payment in a market transaction,it is functioning as

• A) a factor that shifts the aggregate production function
• B) the velocity of circulation.
• C) a medium of exchange.
• D) the real interest rate.

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Definitions:

Inflation

Inflation is the rate at which the general level of prices for goods and services is rising, eroding purchasing power.

Price Level

A measure that reflects the average prices of goods and services in an economy at a given time.

Nominal GDP

The market value of all final goods and services produced in a country in a given period, measured in current prices.

GDP Deflator

An index measuring the change in prices of all new, domestically produced goods and services in an economy.