The foremost role of money is that it acts as a _____
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Medium of exchange
The first and main function of money is to act as a medium of exchange: people sell goods and services for money and use that money to buy what they want. This removes the need for a double coincidence of wants, where each of two people must want what the other has, as in barter.
Why the other options are incorrect
Option (1) Barter exchange — Incorrect. Barter is the direct exchange of goods for goods without money; money replaced it.
Option (2) Digital exchange — Incorrect. Paying digitally is one way of moving money, not a function of money.
Option (4) Services transactions — Incorrect. Buying services is one use of money as a medium of exchange, not a separate function.