Final answer:
Credit cards are considered a medium of exchange in modern economies because they are widely accepted as a payment method for goods and services. The correct option for the student's question is D. medium of exchange.
Step-by-step explanation:
In modern economies, credit cards are considered a medium of exchange because of their widespread acceptance as a method of payment for goods and services. The key function of a medium of exchange is to facilitate the sale, purchase or trade of goods between parties.
For something to be a medium of exchange, it needs to be widely accepted by people within an economy. Credit cards fulfill this role by allowing individuals to easily transfer funds from their credit account to pay for transactions, which means the correct answer to the student's question is D. medium of exchange.
The functions of money, including being a medium of exchange, a unit of account, a store of value, and a standard of deferred payment, all work to stabilize and enable a convenient flow of commerce in an economy.
Credit cards do not alter the total quantity of money within the economy, but they significantly facilitate transactions by allowing individuals to borrow the currency that they will repay at a later date to the credit card company.