In the context of economics, when money is used for exchanges, it primarily serves which function?

• A. Unit of account
• B. Store of value
• C. Standard of deferred payment
• D. Medium of exchange

Answer: (D)

Verified step by step guidance

1. Understand the four primary functions of money in economics: medium of exchange, unit of account, store of value, and standard of deferred payment.
2. Define 'medium of exchange' as the function of money that facilitates transactions by eliminating the inefficiencies of barter systems.
3. Recognize that 'unit of account' refers to money providing a common measure for valuing goods and services.
4. Know that 'store of value' means money can preserve purchasing power over time, and 'standard of deferred payment' means money is accepted for future payments.
5. Conclude that when money is used specifically to facilitate exchanges or transactions, it is fulfilling the function of 'medium of exchange'.