Chapter 23, Problem 5MCQ

To determine

The correct option that is best example for store of value function of money.

Answer to Problem 5MCQ

Option b is correct.

Explanation of Solution

Explanation for correct option:

b.

In this example, the babysitter is saving certain amount for future buying purpose. By doing so, babysitter is holding purchasing power so that a bicycle can be bought with the amount saved. Therefore, option b is correct.

Explanation for incorrect options:

a.

When someone purchases an item telling its worth in countable terms then it refers to the unit of account function of money. Therefore, option a is incorrect.

c.

If somebody make purchases then medium of exchange function of money prevails. Therefore, option c is incorrect.

d.

In this example, currencies are being exchanged. Therefore, option d is incorrect.

e.

In this example, soda is bought from vending machine which costs $1. It depicts unit of account function where measures are used to set prices. Therefore, option e is incorrect.

Economics Concept Introduction

Money: Money is the medium of exchange through which goods and services can be traded. It can perform three main functions i.e. medium of exchange, store of value and unit of account.

Monetary aggregates: It refers to the measures of overall money supply.