What are the functions of money?

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Money is the most liquid of all assets,

Money acts as a medium of exchange,

Both 1 and 2

None of the above

answer is C.

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Detailed Solution

The correct option is 3
Money is the most liquid of all assets, meaning we can easily convert it into any other asset. Money acts as a medium of exchange in a way that it is widely accepted in exchange for any good. It also provides a common unit of accounting against which all the other things can be compared. When we express the value of goods in money terms, it gives us what we call the price of that good. Money also performs the function of a store of value. It can be stored without any loss in its value, thereby making future transactions possible.

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