Final answer:
Inflation is the key factor that gradually diminishes the stored value of money, causing each unit of currency to buy less over time.
Step-by-step explanation:
What gradually diminishes the stored value of money? The phenomenon that causes the stored value of money to diminish over time is known as inflation. Inflation reduces the buying power of money because, as prices for goods and services rise, each unit of currency buys less than it did previously. For example, the shoemaker in a barter system might store her production, shoes, for future use, but she faces the risk of her shoes going out of style. This would make shoes a poor store of value in comparison to money. When we hold onto money, we expect that it will retain its value over time, allowing us to make purchases in the future. While money isn't a perfect store of value due to inflation, which affects its value gradually, it remains the preferred medium for storing value in an economy.