Final answer:
People primarily hold money because it serves as a medium of exchange, allowing them to purchase goods and services. It also acts as a store of value, retaining worth over time, and a unit of account, simplifying transactions. Hence, the correct option is c. serves as a medium of exchange.
Step-by-step explanation:
People hold money primarily for its role as a medium of exchange. This is the most crucial function of money since it allows individuals to buy things. For example, if someone receives a $20 bill, that money can be used to purchase anything up to the value of $20. This demonstrates money's utility in facilitating transactions and trade.
Moreover, money acts as a store of value. If you don't immediately know what to buy, you can save the money and retain its value over time, despite the potential loss of buying power due to inflation. However, this function does not require money to be a perfect store of value, as it will still be recognized as money.
Additionally, money serves as a unit of account, which simplifies transactions by providing a common measure to value goods and services, thereby avoiding the complexities of a barter system.