If I don't activate the IAP (In App Purchase) feature, do I lose the ability to make money?

No. IAP (in-app purchase) is simply a way to make MORE MONEY. 

You will always make money from the ads that are built into your game. If you activate in-app purchases in your game, you give gamers the ability to purchase coins within the game. This creates a new revenue stream, on top of advertising revenue, you will receive the revenue for the coins purchased direct from Google Merchant.

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