A medium of exchange must be:
A)approved by the government.
B)universally acceptable in exchange for goods and services.
C)easy to reproduce.
D)used to eliminate the specialization and division of labor.
E)used when a system of barter exists.

Question

Quizplus · Accepted Answer

A medium of exchange must be universally acceptable in exchange for goods and services, meaning it must be widely recognized and trusted as a means of conducting transactions. Approval by the government is not necessary for a medium of exchange to function, and ease of reproduction would lead to inflationary issues. The use of a medium of exchange does not eliminate specialization and division of labor, but rather facilitates it by allowing individuals to specialize in their respective areas and still be able to obtain other goods and services through trade. A system of barter could exist without a medium of exchange, but the use of a widely-accepted medium of exchange makes trade much more efficient.

A Medium of Exchange Must Be