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Q58 (CAPF/2021) Economy › Money, Banking & Inflation › Digital currency payments Answer Verified

For anything to be recognized as money, it needs to have which of the following characteristics? 1. Act as an intermediate in the exchange process 2. Standard unit for oting prices 3. Must be easily divisible 4. Have higher value in alternative uses Select the correct answer using the code given below.

Result
Your answer: —  Â·  Correct: C
Explanation

Money is defined by its functions and characteristics that facilitate economic activity. Statement 1 is correct as money acts as a medium of exchange, serving as an intermediate in the exchange process to overcome the double coincidence of wants [2]. Statement 2 is correct because money serves as a unit of account, providing a standard measure for quoting prices and valuing products [1]. Statement 3 is correct as divisibility is a key characteristic, allowing money to be divided into smaller units for varied transaction sizes [1]. Statement 4 is incorrect for modern money; while commodity money (like gold) had intrinsic value in alternative uses, modern fiat money is specifically characterized by having no intrinsic value or use of its own beyond its role as money [4]. Therefore, only 1, 2, and 3 are essential characteristics for anything to be recognized as money in a general sense.

Sources

  1. [1] Macroeconomics (NCERT class XII 2025 ed.) > Chapter 3: Money and Banking > Box No. 3.2: Demonetisation > p. 50
  2. [2] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > MONEY > p. 158
  3. [4] Understanding Economic Development. Class X . NCERT(Revised ed 2025) > Chapter 3: MONEY AND CREDIT > Currency > p. 39
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