Q 1 Is Money a commodity If so which of the following charac

Q 1.  Is Money a commodity? If so which of the following characteristics does it satisfy?

A.Means of Exchange

B.Unit of Account

C.Store of Value

D. Measure of Wealth

E.All of the above

Solution

Solution: All of the above

Explanation: Yes, money is a commodity as the three roles played by money includes:

1) Store of value: Money plays the role of the most liquid asset i.e. measures how easily assets can be spent to buy products and services. Money’s value can be retained over time and is a convenient way to store wealth.

2) Unit of account: Money acts as the common standard for measurement of the relative worth of goods and service.

3) Medium of exchange: People have requirements and wants that they cannot produce themselves. Thus the money can be used for buying and selling of products and services. If money doesn\'t exist goods would have to be exchanged through the process of barter system. Money mediates trade and makes markets more effective