Question

Which function of money facilitates the expression of the exchange ratio of goods by serving as a common denomination?

• A. Medium of exchange
• B. Measure of value
• C. Store of value
• D. Standard of deferred payments

Hint:

Remember the main functions of money: medium of exchange, measure of value, store of value, and standard of deferred payments.
Measure of value helps in pricing and comparing goods and services.

Answer 1

The Correct Option is B

Money serves several functions, one of which is the "measure of value" or "unit of account." This function allows money to be a common standard to express the value of goods and services, enabling comparison and exchange.
Step 1: Function explained
By assigning prices to goods and services, money helps determine the exchange ratio, i.e., how much of one good is worth in terms of another.
Step 2: Other functions
- Medium of exchange helps facilitate buying and selling.
- Store of value means money can preserve value over time.
- Standard of deferred payments allows settling debts in the future.
Hence, option (B) correctly identifies the function described.