Question

What are the three main purposes of money?

A) Store of value, unit of account, medium of exchange
B) Standard of living, investment, economic growth
C) Wealth accumulation, global trade facilitator, commodity pricing
D) Borrowing power, financial security, economic stability

Answer 1

Money serves three main purposes: a medium of exchange, a store of value, and a unit of account.

Step-by-step explanation:

The three main purposes of money are:

1. A Medium of Exchange: Money is used as a way of buying things and exchanging goods and services. It simplifies transactions by providing a common currency to assign specific values to goods and services.
2. A Store of Value: Money acts as a means of saving and storing wealth. It allows individuals to hold onto their purchasing power for future use and prevents the value of the money from depreciating over time.
3. A Unit of Account: Money serves as a standard unit of measurement to compare the value of different goods and services. It helps in determining the relative worth or cost of items and facilitates economic calculations.