Final answer:
Relaxing credit regulations for banks can enhance money's role as a medium of exchange and as a standard for deferred payments by making loans more accessible and affordable for households and firms. The correct answer is option C Money as a medium of exchange.
Step-by-step explanation:
The question asks how relaxing credit regulations for banks to assist struggling households and firms would impact the functions of money for households. In terms of the roles that money plays, the most affected would likely be money as a medium of exchange and money used to settle debts in the future.
If credit regulations are relaxed, it implies that there would be an increase in the availability of loans and potentially lower interest rates, which may boost spending and investment as access to funds becomes easier for households and firms. This could lead to a more active use of money as a medium of exchange.
Moreover, with increased access to credit, households might be more capable of managing their future financial obligations, which relates to money's function as a standard of deferred payment.