Question

Which of the following is the best explanation for the ultimate purpose of money?

a. Money exists to simplify exchanges.
b. Money exists because people want to accumulate it, thus creating a demand.
c. Money is nothing more than an IOU from the government.
d. Money has intrinsic value and worth.
e. Money has value based on what can be purchased with it.

Answer 1

Money's primary function is to simplify exchanges in an economy, acting as a medium of exchange, unit of account, store of value, and standard of deferred payment, despite its various forms in different cultures.

Step-by-step explanation:

The best explanation for the ultimate purpose of money is that money exists to simplify exchanges. Money serves as a medium of exchange, allowing individuals to buy and sell goods and services without the complexities of bartering, which requires a double coincidence of wants. This simplification facilitates trade in a modern economy, which involves thousands upon thousands of different jobs and goods. Additionally, money functions as a unit of account, a store of value, and a standard of deferred payment. Although money has taken various forms across different cultures, its core purpose remains to facilitate transactions and coordinate trades efficiently.