Which Statement Best Illustrates the Medium of Exchange Function of Money

question 49

Multiple Choice

Which statement best illustrates the medium of exchange function of money?

• A) You keep some money hidden in your shoe.
• B) Your recent tax assessment has valued your condo at $200,000..
• C) You pay for your double latte using currency.
• D) You lend $25 to your friend.

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Definitions:

Exchange Rate

The value of one country's currency in terms of another country's currency.

Market For Foreign-Currency Exchange

A financial market where currencies are traded, facilitating international trade and investment.

Trade Deficits

A situation where a country's imports exceed its exports during a given time period.

Government Budget

A financial statement presenting the government's proposed revenues and spending for a specific financial year.