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Difficulty: EasyMeaning, Functions, and Characteristics of Money

For an item to function effectively as money in an economy, it must possess general acceptability so that individuals readily accept it in exchange for goods, services, and settlement of debts.

Answer: Answer

Answer

True
The statement is true because general acceptability is the defining characteristic of money that enables it to act as a universal medium of exchange and settle financial obligations without friction.

Step-by-Step Solution

1
Examine the definition and essential characteristics of money.
Money is defined as anything that is generally acceptable as a medium of exchange and a standard for settling debts.
Understanding the fundamental definition establishes the role of acceptability in money's existence.
2
Evaluate the statement against commercial principles.
Without general acceptability, trade cannot be facilitated seamlessly because parties will refuse to take the item in exchange for real goods or services.
This confirms that general acceptability is mandatory for any form of currency or monetary instrument.

Key Concept

General Acceptability of Money
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Topics

Meaning, Functions, and Characteristics of Money

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