Question

Assertion (A): Money is a medium of exchange.

Reason (R): Money possesses general acceptability.

Options

• Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).

• Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).

• Assertion (A) is true but Reason (R) is false.

• Assertion (A) is false but Reason (R) is true.

Answer 1

Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).

Explanation:

Money may effectively act as a universal medium of exchange precisely because it is widely accepted. Because all persons in an economy gladly accept currency as a legal and trusted form of payment, it eliminates the need for a double coincidence of wants, allowing trade to proceed smoothly.