The Functions of Money Are

question 171

Multiple Choice

The functions of money are

• A) interest rates, prices and output.
• B) M1, M2 or currency.
• C) currency, deposits, and traveler's checks.
• D) medium of exchange, unit of account, and store of value.

---

Definitions:

Interest Rate

The cost of borrowing money, typically expressed as a percentage of the amount borrowed, paid to the lender over a specified period.

Spending Multiplier

The ratio of the change in total output to the initial change in spending that brought it about.

Marginal Propensity

The proportion of an additional income that an individual or population spends on consuming rather than saving.

Multiplier Effect

The economic concept that an initial increase in spending leads to a greater increase in national income and total economic output.