Question

You pay your doctor $75 for an office visit. The doctor then uses the money to pay his cable service. This is an example of which of the four functions of money?

Answer 1

As a Medium of Exchange

Step-by-step explanation:

The four functions of money are:

1. As a Medium of Exchange
2. As a Measure of Value
3. As a Store of Value
4. As a standard of Deferred Payment.

As a Medium of Exchange

Money as a medium of exchange has its most important role of facilitating the exchange of goods and services. Hitherto before the advent of money. Trade by Barter was the only means of conducting transactions. The use of money in the exchange of gods and services solved the major difficulty encountered with the barter system, which his "Double coincidence of wants".

Money by performing its most traditional role is accepted by all irrespective of whether they need each others good or services.

However to fulfill this role or function, Money has to be generally acceptable, portable, divisible, durable, stable in value and homogeneous.