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Question

Which of the following is the main function of money according to modern economists ?
  1. Medium of exchange
  2. Common measure of value
  3. Store of value
  4. All of the above

A
Common measure of value
B
Medium of exchange
C
Store of value
D
All of the above
Solution
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Money refers to a common medium of exchange that is issued under the law of government and acts as a legal tender for the whole country. The main function of money according to modern economics is money as a store of value. As a store of value, money functions by helping individuals to store their wealth in the form of money. Therefore, money acts as an asset that sustains value over a period of time because it is non-perishable and inexpensive form of storage.

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