Question

Which of the following showcases the feature of medium of exchange?

• A. Something that is generally acceptable in exchange for goods and services.
• B. A legally recognized asset that is generally accepted in exchange for goods and services.
• C. Something that circulates and provides a standardized means of evaluating the the relative price of goods and services.
• D. The ability of money to command purchasing power in the future.

Answer 1

The correct option is A Something that is generally acceptable in exchange for goods and services.

A medium of exchange is an intermediary instrument used to facilitate the sale, purchase or trade of goods between parties. For an instrument to function as a medium of exchange, it must represent a standard of value accepted by all parties. In modern economies, the medium of exchange is currency.