Question

Any item that people can use to transfer purchasing power from the present to the future is called?

A.a medium of exchange.

B.a unit of account.

C.a store of value.

D.None of the above is correct.

Answer 1

Any item that allows transferring purchasing power to the future is known as a store of value, which is one of the main functions of money alongside being a medium of exchange and a unit of account. C is the correct answer.

Step-by-step explanation:

Any item that people can use to transfer purchasing power from the present to the future is called a store of value. This is one of the main functions of money in the economy, as it allows individuals to hold money and be confident that it will retain its value over time, making it possible to make purchases in the future. This characteristic is essential because if money did not keep its value, there would be a need to spend it immediately before it lost worth, thereby failing in its role as a medium of exchange.

While money serves as a medium of exchange and a unit of account, making transactions easier by providing a common basis for valuing goods and services, it is the function as a store of value that enables it to transfer purchasing power to the future.

In comparison to barter systems or commodity goods, which can lose value over time due to factors like going out of style or perishability, money typically better maintains its value, despite the fact that it may not be a perfect store of value, especially in economies with inflation.