ECONOMIC QUESTION DRAW IT IF IT IS NEEDED QUESTION 3 a Why a

ECONOMIC QUESTION. DRAW IT IF IT IS NEEDED.?

QUESTION 3 a. Why a credit card is not considered money? b. Money is demanded for three main purposes. Provide an example where you have demanded money for each of these three purposes.

Solution

3.

a.

Credit card is not a financial assets but it is a card which helps in borrowing for purchasing any goods and services and in near future it is needed to return those money to banks.

This is the reason why credit card is not a money.

b.

Money is demanded due to following three reasons.

1.

Store value; money can be stored in large quantities because it doesn\'t take more spaces.

2.

Medium of exchange; money is demanded because it is a good medium of exchange and in case of money, the problem of double coincidence of wants do not arises.

3.

Unit of account; since money is available in many denomination, and it\'s available everywhere in the same form.

Hence money is used in the form of unit of account.