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31 January, 00:31

When economists say that money serves as a medium of exchange, they mean that it is a. a way to keep wealth in a readily spendable form for future use. b. a means of payment. c. a monetary unit for measuring and comparing the relative values of goods. d. declared as legal tender by the government.

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  1. 31 January, 00:35
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    B

    Explanation:

    Money as a medium of exchange means money can be used a means of payment. That is, money is used is sorting everyday transactions. Recall that there are three motives of holding money;

    1. Transactionary

    2. Precautionary

    3. Speculative

    Transactionary motive means you can use money to sort your everyday transactions.

    Precautionary motive - You can save money for rainy days. (i. e. accident, sickness etc)

    Speculative motive means you can use money to invest - make investment decisions with money (buy treasury bills, money market fund instruments, currency, etc)

    All of the above motives can not be achieved if money does not serve as a means of payment.

    Money as a medium of exchange means the legal tender (money) has a government backing.
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