Among the following what are the functions of money?
(A). Medium of exchange.
(B). Unit of account.
(C). Unit of purchasing power.
(D). Store of value.
Choose the correct answer from the options given below:
Among the following what are the functions of money?
(A). Medium of exchange.
(B). Unit of account.
(C). Unit of purchasing power.
(D). Store of value.
Choose the correct answer from the options given below:
Solution
Option 1 -> Includes Medium of exchange, Unit of account, and Store of value - the three primary functions of money.
Option 2 -> Incorrectly includes 'Unit of purchasing power' instead of 'Store of value'.
Option 3 -> Incorrectly includes 'Unit of purchasing power' which is not a standard function of money.
Option 4 -> Excludes 'Medium of exchange' which is the most fundamental function of money.
Hence, Option 1: (A), (B) and (D) only -> The three primary functions of money are: (1) Medium of Exchange - money facilitates trade by eliminating the need for double coincidence of wants, (2) Unit of Account - money provides a common measure to value goods and services, and (3) Store of Value - money can be saved and used for future purchases. 'Unit of purchasing power' (C) is not a recognized function of money; rather, purchasing power is a characteristic that describes how much goods/services money can buy, which varies with inflation. -> correct
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