Question

Which of the following scenarios BEST illustrates the role of money as a medium of exchange?

A) John barters his bicycle for Sarah's skateboard.
B) Sally saves her allowance to buy a new video game.
C) Jane uses cash to purchase groceries at the store.
D) David donates money to a charity.

Answer 1

Jane using cash to buy groceries is the best example of money as a medium of exchange since it facilitates the transaction between buyer and seller without direct barter.

Step-by-step explanation:

The scenario that BEST illustrates the role of money as a medium of exchange is C) Jane uses cash to purchase groceries at the store. As a medium of exchange, money acts as an intermediary in transactions, accepted by both the buyer and the seller, and is a more efficient alternative to bartering. Jane's use of cash allows her to exchange a recognized value for the groceries without needing a direct trade of goods or services. The acceptance of cash is crucial for it to function effectively as a medium of exchange in markets for goods, labor, and financial capital.