Which of the following is a disadvantage of not having a store of value in an economy?

• A. It eliminates the need for a medium of exchange.
• B. It ensures that money always retains its purchasing power.
• C. It makes it difficult to save wealth for future use.
• D. It increases the efficiency of barter transactions.

Answer: (C)

Verified step by step guidance

1. Understand the concept of a 'store of value' in economics: it refers to the ability of an asset, like money, to retain its value over time so that it can be saved and used in the future.
2. Analyze the role of a store of value in an economy, which allows individuals to save wealth and defer consumption to a later date without losing purchasing power.
3. Consider what happens if there is no store of value: money or assets would lose value quickly, making it difficult for people to save or plan for future expenses.
4. Evaluate each option in the problem by comparing it to the role of a store of value. For example, eliminating the need for a medium of exchange or increasing barter efficiency are unrelated to the store of value function.
5. Conclude that the main disadvantage of not having a store of value is that it makes saving wealth for future use difficult, as money would not reliably hold its value over time.