Which of the following best describes the relationship between money and currency in economics?

• A. Currency refers to electronic payments, while money only refers to coins and notes.
• B. Money is only used for saving, while currency is only used for spending.
• C. Money and currency are exactly the same and can always be used interchangeably.
• D. Currency is a physical form of money, while money includes both currency and other forms such as bank deposits.

Answer: (D)

Verified step by step guidance

1. Understand the definitions: Money is a broader concept that includes anything widely accepted as a medium of exchange, a store of value, and a unit of account.
2. Recognize that currency is a subset of money, specifically the physical forms such as coins and banknotes used for transactions.
3. Identify other forms of money beyond currency, such as electronic money, bank deposits, and digital balances, which are not physical but still function as money.
4. Compare the options given and see which one correctly captures the relationship that currency is a physical form of money, while money itself includes currency plus other forms.
5. Conclude that the best description is: 'Currency is a physical form of money, while money includes both currency and other forms such as bank deposits.'