The Three Functions of Money Are

question 53

Multiple Choice

The three functions of money are:

• A)spending for consumption, investment, and government purchases.
• B)measuring balance of payments, exchange rates, and interest rates.
• C)implementing monetary policy, fiscal policy, and structural policy.
• D)serving as a medium of exchange, unit of account, and store of value.

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Definitions:

Payback Period

The duration of time it takes for an investment to generate enough revenue to recover the initial cost of the investment.

Profitability Index

A measure used in capital budgeting to evaluate the profitability of an investment, calculated as the present value of future cash flows divided by the initial investment cost.

Discount Rate

The interest rate charged to commercial banks and other depository institutions for loans received from the Federal Reserve's discount window.