Kavish went to the supermarket with ₹5000 in his wallet to buy groceries for his family. He purchased vegetables, fruits and other household items, paying the respective prices at the counter. Which functions of money were being demonstrated in this real life scenario?

(A) Unit of Labour.
(B) Store of Value.
(C) Medium of Exchange.
(D) Measure of Creditworthiness.

Choose the correct answer from the options given below:

(B) and (C) only

The correct answer is Option (2) → (B) and (C) only

In the given scenario, Kavish's actions demonstrate two key functions of money:

• (B) Store of Value: Kavish had ₹5000 in his wallet. This implies that he had saved or held this money, meaning it retained its purchasing power over time until he decided to use it. Money acts as a store of value, allowing individuals to defer consumption.

• (C) Medium of Exchange: Kavish purchased vegetables, fruits, and other household items, paying the respective prices at the counter. This directly illustrates money's role as a medium of exchange, facilitating transactions without the need for barter. He exchanged money for goods.

Why the other options are incorrect:

• (A) Unit of Labour: This is not a recognized function of money. Money serves as a unit of account (or measure of value), allowing the value of goods and services to be expressed in a common unit, but not specifically "unit of labour."

• (D) Measure of Creditworthiness: Creditworthiness is an assessment of an individual's ability to repay debt, which is related to their financial standing but is not a direct function of money itself.