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Which of the following are functions of money?Multiple select question.Store of valueUnit of accountMedium of exchangeHedge against inflation

Question

Which of the following are functions of money?

  • Store of value
  • Unit of account
  • Medium of exchange
  • Hedge against inflation
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Solution

The functions of money are:

  1. Store of Value: Money can be saved and used in the future. It doesn't lose its value over time, which makes it a good store of value.

  2. Unit of Account: Money is used to measure the value of goods and services. It provides a consistent method of comparing the values of different goods and services.

  3. Medium of Exchange: Money is used to buy and sell goods and services. It is universally accepted, which makes it a good medium of exchange.

"Hedge against inflation" is not typically considered a primary function of money. While some forms of money (like certain investments) can potentially serve as a hedge against inflation, this is not a universal or primary function of money in an economy.

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