What is money? What are its functions and characteristics?
What will be an ideal response?
Money is, essentially, anything that is commonly accepted as a means for paying for goods and services. It could be rocks, paper, or anything else. The key is that money is anything that society says is money. Its three functions are: a medium of exchange, a measure of relative worth, and a store of value. Money serves the function of a medium of exchange if it prevents an exchange without resorting to the barter system. How much is that thing worth? That is the function of money in terms of the measurement of relative value. If we do not spend everything at one time then we need money to serve as a store of value. It doesn’t matter if it is coconuts or gold, or paper. How much do you have? In order to efficiently fulfill these functions it needs the following characteristics: acceptability, portability, durability, stability, scarcity, and divisibility.
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a. True b. False Indicate whether the statement is true or false
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Which of the following might occur when a firm increases its collection efforts?
A) a decline in accounts payable B) an increase in bad debts C) an increase in inventory costs D) an increase in sales
Investing in bonds is generally less risky than investing in stocks
Indicate whether this statement is true or false.