Which of the following statements is true? A) One of the limitations of using mo

Question

Which of the following statements is true? A) One of the limitations of using money is that it does not allow for the transfer of purchasing power into the future. B) The necessary condition required for money to function as a medium of exchange is that it also needs to be a store of value. C) Hours of labor that go into producing a product is a better unit of account than paper money. D) When money is used as a yardstick to describe the price of various goods and services, it is serving as a store of value.

Explanation / Answer

Option (B).

For any financial instrument to work as a medium of exchange, it must represent a store of value. Therefore, when money is used as a medium of exchange, it needs to be a store of value too.

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