Money and Economy

Question 1

What is money?

Accepted Answer

Money is anything that is generally accepted as a medium of exchange for goods and services and in the payment of debts.

Question 2

What was the barter system?

Accepted Answer

The barter system was the exchange of goods for goods directly, without the use of money.

Question 3

State one major difficulty of the barter system.

Accepted Answer

A major difficulty was the 'double coincidence of wants' — both persons had to want exactly what the other offered at the same time.

Question 4

Name the main functions of money.

Accepted Answer

The main functions of money are: a medium of exchange, a measure of value, a store of value and a standard for deferred (future) payments.

Question 5

What is meant by money as a 'medium of exchange'?

Accepted Answer

As a medium of exchange, money is accepted by all in the buying and selling of goods and services, removing the need for barter.

Sample questions