Choose the Best Definition of 'Money' from the Following

question 32

Multiple Choice

Choose the best definition of 'money' from the following:

• A)the arrangements that can be used to settle commercial transactions
• B)cash
• C)the instruments that can be used as a means of exchange
• D)the supply of funds from surplus units for use by deficit units.
• E)None of these.

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Definitions:

Money Market

A segment of the financial market where short-term financial assets are traded, facilitating the borrowing and lending of short-term funds.

Liquidity Preference Theory

A theory that suggests individuals prefer to have their resources in liquid form as opposed to investing in long-term assets, affecting interest rates and economic activity.

Money Demanded

The total amount of money that households and businesses wish to hold at any given interest rate, at a specific time.

Federal Funds Rate

The interest rate at which banks lend reserves to each other overnight, serving as a key monetary policy tool of the Federal Reserve.