Question

In a remote village, a person used five beaver pelts to buy a bag of rice and two beaver pelts to buy a pair of shoes. For what purpose did this person use the money?

A) increase trade
B) store of value
C) medium of exchange
D) unit of account
E) investment

Answer 1

In the given situation above, the person used five beaver pelts to purchase a bag of rice and another two beaver pelts for a pair of shoes. Therefore, based on this scenario, the purpose that this person used this money is for medium of exchange. The correct answer would be option C. 

Answer 2

Today we have currencies to buy things, but there was an era when there were no currencies. People at that times used to exchange things to buy or sell something.

In the given case person used five beaver pelts to buy a bag of rice and two beaver pelts to buy a pair of shoes, so it is a clear indication that the person used a medium of exchange.

Hence, the correct answer is C) medium of exchange