Which of the following is a basic function of money?

• A. Medium of exchange
• B. Unit of account
• C. Store of value
• D. All of the above

Answer: (D)

Money serves as three basic roles in an economy: a medium of exchange, a unit of account, and a store of value. As a medium of exchange, it is widely accepted for buying and selling, which makes trades efficient and avoids the limitations of barter. As a unit of account, it provides a common measure for quoting prices and keeping financial records, so values are easy to compare. As a store of value, money can be saved and used in the future, preserving purchasing power over time (though inflation can affect this). Because money can perform all three functions, the option that includes all of them best captures the role of money.