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Which of the following is a commonly accepted definition of money?
- a)Any good which is commonly used as a store of value
- b)Any good which is exchanged for gold at a fixed rate
- c)Any good which is acceptable to a bank
- d)Any good which is commonly accepted as a medium of exchange
Correct answer is option 'D'. Can you explain this answer?
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Which of the following is a commonly accepted definition of money?a)An...
Any commodity that is accepted as a medium of exchange is money.
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Which of the following is a commonly accepted definition of money?a)An...
Commonly Accepted Definition of Money
Money is a crucial concept in economics and plays a vital role in the functioning of an economy. It is a medium of exchange that allows individuals to trade goods and services. There are various definitions of money, but the commonly accepted definition is option 'D': Any good which is commonly accepted as a medium of exchange.
Explanation
Money serves three primary functions in an economy: medium of exchange, unit of account, and store of value. The commonly accepted definition of money focuses on its function as a medium of exchange. Let's delve into this definition further:
Medium of Exchange:
- Money serves as a medium of exchange, which means it is widely accepted in transactions for goods and services.
- When people engage in economic activities, they use money to facilitate the exchange process, rather than resorting to barter or other forms of direct exchange.
- Money eliminates the need for double coincidence of wants, where two parties must have goods or services that the other desires. Instead, individuals can use money to obtain what they need.
Characteristics of Money:
For a good to be commonly accepted as a medium of exchange, it typically possesses certain characteristics:
1. Acceptability: Money must be widely accepted by individuals and businesses as a means of payment.
2. Divisibility: Money should be easily divisible into smaller units to facilitate transactions of various sizes.
3. Uniformity: Each unit of money should be the same in terms of value and appearance.
4. Durability: Money needs to withstand wear and tear to retain its value over time.
5. Portability: Money should be easily portable, enabling individuals to carry it for transactions.
6. Scarcity: Money should have limited supply to maintain its value. If it becomes too abundant, its purchasing power decreases.
Conclusion
In summary, the commonly accepted definition of money is any good that is widely accepted as a medium of exchange. Money facilitates economic transactions by eliminating the need for barter and providing a universally accepted means of payment. It possesses certain characteristics such as acceptability, divisibility, uniformity, durability, portability, and scarcity.
Money is a crucial concept in economics and plays a vital role in the functioning of an economy. It is a medium of exchange that allows individuals to trade goods and services. There are various definitions of money, but the commonly accepted definition is option 'D': Any good which is commonly accepted as a medium of exchange.
Explanation
Money serves three primary functions in an economy: medium of exchange, unit of account, and store of value. The commonly accepted definition of money focuses on its function as a medium of exchange. Let's delve into this definition further:
Medium of Exchange:
- Money serves as a medium of exchange, which means it is widely accepted in transactions for goods and services.
- When people engage in economic activities, they use money to facilitate the exchange process, rather than resorting to barter or other forms of direct exchange.
- Money eliminates the need for double coincidence of wants, where two parties must have goods or services that the other desires. Instead, individuals can use money to obtain what they need.
Characteristics of Money:
For a good to be commonly accepted as a medium of exchange, it typically possesses certain characteristics:
1. Acceptability: Money must be widely accepted by individuals and businesses as a means of payment.
2. Divisibility: Money should be easily divisible into smaller units to facilitate transactions of various sizes.
3. Uniformity: Each unit of money should be the same in terms of value and appearance.
4. Durability: Money needs to withstand wear and tear to retain its value over time.
5. Portability: Money should be easily portable, enabling individuals to carry it for transactions.
6. Scarcity: Money should have limited supply to maintain its value. If it becomes too abundant, its purchasing power decreases.
Conclusion
In summary, the commonly accepted definition of money is any good that is widely accepted as a medium of exchange. Money facilitates economic transactions by eliminating the need for barter and providing a universally accepted means of payment. It possesses certain characteristics such as acceptability, divisibility, uniformity, durability, portability, and scarcity.
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Which of the following is a commonly accepted definition of money?a)Any good which is commonly used as a store of valueb)Any good which is exchanged for gold at a fixed ratec)Any good which is acceptable to a bankd)Any good which is commonly accepted as a medium of exchangeCorrect answer is option 'D'. Can you explain this answer?
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Which of the following is a commonly accepted definition of money?a)Any good which is commonly used as a store of valueb)Any good which is exchanged for gold at a fixed ratec)Any good which is acceptable to a bankd)Any good which is commonly accepted as a medium of exchangeCorrect answer is option 'D'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Which of the following is a commonly accepted definition of money?a)Any good which is commonly used as a store of valueb)Any good which is exchanged for gold at a fixed ratec)Any good which is acceptable to a bankd)Any good which is commonly accepted as a medium of exchangeCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following is a commonly accepted definition of money?a)Any good which is commonly used as a store of valueb)Any good which is exchanged for gold at a fixed ratec)Any good which is acceptable to a bankd)Any good which is commonly accepted as a medium of exchangeCorrect answer is option 'D'. Can you explain this answer?.
Which of the following is a commonly accepted definition of money?a)Any good which is commonly used as a store of valueb)Any good which is exchanged for gold at a fixed ratec)Any good which is acceptable to a bankd)Any good which is commonly accepted as a medium of exchangeCorrect answer is option 'D'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Which of the following is a commonly accepted definition of money?a)Any good which is commonly used as a store of valueb)Any good which is exchanged for gold at a fixed ratec)Any good which is acceptable to a bankd)Any good which is commonly accepted as a medium of exchangeCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following is a commonly accepted definition of money?a)Any good which is commonly used as a store of valueb)Any good which is exchanged for gold at a fixed ratec)Any good which is acceptable to a bankd)Any good which is commonly accepted as a medium of exchangeCorrect answer is option 'D'. Can you explain this answer?.
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