Question 18.1

1. Suppose you hold a gift card, good for certain products at participating stores. Is this gift card money? Why or why not?

The defining characteristic of money is its liquidity: how easily it can be used to purchase goods and services. Although a gift card can easily be used to purchase a very defined set of goods or services (the goods or services available at the store issuing the gift card), it cannot be used to purchase any other goods or services. A gift card is therefore not money, since it cannot easily be used to purchase all goods and services.