Priyanshu went to the shopkeeper and asked for a pencil box, to which shopkeeper said, " You have to pay Rs 100". Priyanshu gave the amount and brought the pencil box home. Which of the following function is referred in the given situation?

A medium of exchange

The correct answer is: Option 4 A medium of exchange

In the given scenario, money (Rs 100) acts as a medium of exchange. Priyanshu uses money to directly exchange for the pencil box. The shopkeeper wouldn't barter for something else; they require rupees in exchange for the good.

Let's discuss the other options:

1. A store of value: Money serves as a store of value when it can be saved and used for future purchases. In this scenario, if Priyanshu intends to use the Rs 100 he paid for the pencil box for future purchases, then it would represent the function of money as a store of value. However, since the scenario does not mention anything about saving or using the money for future purchases, this option doesn't apply directly to the given situation.

2. A unit of account: Money acts as a unit of account when it provides a common measure for pricing goods and services. In this case, Priyanshu and the shopkeeper use the currency (Rs 100) as a unit to determine the price of the pencil box. The transaction doesn't explicitly compare prices of different goods; it focuses on the pencil box priced at Rs 100.

3. A standard of deferred payment: Money serves as a standard of deferred payment when it's used to settle debts or make payments in the future. This function is more relevant in situations where transactions involve credit or loans with payments scheduled for a later date. Since Priyanshu pays the full amount upfront for the pencil box, there's no indication of deferred payment in this scenario. Therefore, this option doesn't apply directly to the given situation.