What is the texts definition of money?Why is the barter system considered inadequate?What functions of money does the

Certainly! Here are answers to the questions based on the text:

1. What is the text’s definition of money?
   The text defines money as any object or record that is generally accepted as payment for goods and services and repayment of debts in a given country or socio-economic context. Money is what people agree to use as a medium of exchange to facilitate trade.

2. Why is the barter system considered inadequate?
   The barter system is considered inadequate because it involves the direct exchange of goods and services without a standardized medium of exchange. In primitive societies, people had to find others with exactly what they needed and who needed what they had, creating inefficiencies and difficulties in matching wants and needs.

3. What functions of money does the text mention?
   The text mentions several functions of money:

   • Medium of exchange: Money serves as a medium to facilitate the exchange of goods and services, overcoming the limitations of the barter system.
   • Unit of account: Money is used as a standard numerical unit of measurement to determine the market value of goods, services, and transactions.
   • Store of value: Money should reliably hold its value over time, allowing people to save, store, and retrieve it for future use.
   • Standard of deferred payment: Money can be used as a standard for making future payments, like when borrowing money and committing to repay in the future.

4. Can you explain what a unit of account is?
   A unit of account is a standard numerical unit used to measure the market value of goods, services, and transactions. It provides a common measure for comparing the worth of different items and helps in setting prices and making financial agreements. For example, a currency can act as a unit of account, allowing people to determine the value of goods and services in terms of that currency.

5. What comprises a country’s money supply?
   A country’s money supply typically consists of two main components:

   • Currency: This includes physical forms of money, such as banknotes and coins, in circulation among the public.
   • Bank Money: This refers to the balance held in checking accounts and savings accounts in banks. In modern banking, these records are mostly computerized and form a significant portion of the broad money supply in developed countries.

These components collectively make up the money supply of a country, facilitating various economic transactions and financial activities.