A new nation has emerged and needs to create a currency. Which of these characteristics would make it a medium of exchange?

Question

(1 point)
Responses

if other nations begin to use it

if other nations begin to use it

if the nation’s economy is based on it

if the nation’s economy is based on it

if the currency will hold its value over time

if the currency will hold its value over time

if it is accepted with a known currency, like the dollar

Answer 1

For a currency to function effectively as a medium of exchange, it must be widely accepted by people involved in transactions. The most relevant characteristic from your options would be:

• if it is accepted with a known currency, like the dollar

This indicates that the currency can be exchanged for goods and services, thus fulfilling the role of a medium of exchange. While the other characteristics mentioned may contribute to the overall effectiveness or stability of the currency, acceptance is key to its function as a medium of exchange.