Chapter 23, Problem 2MCQ

To determine

The correct option that refers to function of money when a person is intended to purchase an item of worth $10.

Answer to Problem 2MCQ

Option c is correct.

Explanation of Solution

Explanation for correct option:

c.

As a unit of account function of money, the value is assigned and economic calculations can be made. If a person is intended to spend $10 to buy a product then it is becaue of unit of account function of money. Therefore, option c is correct.

Explanation for incorrect options:

a.

In this, medium of exchange is not specific as the person is intended to buy an item whose worth is $10. Here the item is not specified and the purpose is not defined. Therefore, option a is incorrect.

b.

Since, store of value function defines the holding purchasing power rather than measure for setting prices. Therefore, option b is incorrect.

d.

Measure of usefulness can be different for different people. It is not uniform. Therefore, option d is incorrect.

e.

Since, only one option i.e. option c is correct. Therefore, option e is incorrect.

Economics Concept Introduction

Money: Money is the medium of exchange through which goods and services can be traded. It can perform three main functions i.e. medium of exchange, store of value and unit of account.