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Suppose you hold a gift certificate, good for certain products at participating stores. Is this gift certificate considered as money? Why or why not?

1) Yes, because it can be used to purchase goods or services.
2) No, because it cannot be used as a medium of exchange.
3) Yes, because it has a monetary value.
4) No, because it is not issued by a government or financial institution.

1 Answer

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Final answer:

A gift certificate is not considered money because it does not fulfill all the functions required of money, such as being a universal medium of exchange and being issued by a government or financial institution.

Step-by-step explanation:

The question concerns whether a gift certificate is considered as money. The answer is No, because a gift certificate cannot be used as a medium of exchange. Money serves several key functions in an economy: it is a medium of exchange, a unit of account, a store of value, and a standard of deferred payment. While a gift certificate does have a monetary value and can be used to purchase goods or services, it is usually restricted to particular stores or products and, hence, cannot be universally used like money. Furthermore, unlike official currency or financial instruments such as checks, it is not issued by a government or a financial institution. So, while it has value and can be used within certain constraints, it does not fulfill all the functions needed to be considered money.

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