Which of the following options shows the function of money where it works as an asset and can be possessed for use in future?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → a store of value
Money can be kept as an asset and used later. Keeping wealth in money for future use is its store of value function.
Option (1) a standard of deferred payments — Incorrect. This means money used to settle payments due in the future, such as repaying a loan.
Option (2) a unit of account — Incorrect. This is money used to measure and compare values.
Option (3) a store of value — Correct. Money is held as an asset for future use.
Option (4) a medium of exchange — Incorrect. This is money used to buy and sell goods.
Note: The concept in Option (1), ‘standard of deferred payments’, is not in the NCERT book (2026-27); it is explained here for the benefit of the students.
NCERT (2026-27): “3.1 Functions of Money … This problem can be solved if you sell your rice for money. Money is not perishable and its storage costs are also considerably lower. It is also acceptable to anyone at any point of time. Thus money can act as a store of value for individuals. Wealth can be stored in the form of money for future use. However, to perform this function well, the value of money must be sufficiently stable.” |