If peanuts serve as a medium of exchange, a unit of account, and a store of value, thenpeanuts areA) bank deposits.B) reserves.C) money.D) loanable funds.
Question
If peanuts serve as a medium of exchange, a unit of account, and a store of value, then peanuts are
A) bank deposits. B) reserves. C) money. D) loanable funds.
Solution
The answer is C) money.
Here's why:
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Medium of Exchange: This means that peanuts are being used in exchange for goods or services. This is a primary function of money.
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Unit of Account: If peanuts are being used as a measure of value in the economic system, they are serving as a unit of account. This is another key function of money.
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Store of Value: If peanuts can be saved and used in the future while retaining their value, they are serving as a store of value. This is the third key function of money.
Therefore, if peanuts are serving all these three functions, they are acting as money.
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