When you hear the word 'money' in economics, which of the following best describes its primary function?

• A. A resource that directly produces goods and services
• B. A tool for measuring national happiness
• C. A medium of exchange used to facilitate transactions
• D. A form of government regulation

Answer: (C)

Verified step by step guidance

1. Understand that in economics, 'money' is primarily defined by its functions in the economy.
2. Recall the three main functions of money: medium of exchange, unit of account, and store of value.
3. Identify that the primary function of money is to act as a medium of exchange, which means it is used to facilitate transactions between buyers and sellers.
4. Recognize that money is not a resource that directly produces goods and services, nor is it a tool for measuring national happiness or a form of government regulation.
5. Conclude that the best description of money's primary function is 'a medium of exchange used to facilitate transactions.'