An individual deposits half of his salary in a bank account every month. Which function of money represents this action?

Rationale

Store of value represents the action of depositing half of his salary in a bank account every month.

By depositing money into a bank account, the individual is preserving the purchasing power of his salary over time, thus utilizing money as a store of value. This function allows individuals to save and defer consumption until a later date while maintaining the value of their funds.

A (Unit of account) YOUR ANSWER

This is the correct choice as depositing money in a bank account allows the individual to save and retain wealth for future use. The bank account preserves the value of the money over time, enabling the individual to access it later for purchasing goods and services.

B (Medium of exchange) YOUR ANSWER

The unit of account function refers to the standard numerical unit of measurement that provides a consistent measure of value for goods and services. While money does serve this purpose, the action of depositing salary does not directly relate to measuring value but rather to saving it.

C (Store of value) CORRECT

Barter involves the direct exchange of goods and services without the use of money. Since the individual is depositing money rather than exchanging goods or services, this choice is not applicable to the scenario described.

D (Barter) YOUR ANSWER

The medium of exchange function refers to the use of money to facilitate transactions for goods and services. While money is being saved, the act of depositing does not involve immediate transactions, making this choice inappropriate in the context of the question.

Conclusion

Using money as a store of value is essential for individuals who wish to save for future expenditures. In this scenario, depositing half of his salary in a bank account exemplifies this function, as it preserves wealth over time. The other options relate to different functions of money that do not align with the act of saving in a bank account.

An individual deposits half of his salary in a bank account every month. Which function of money represents this action?

Store of value represents the action of depositing half of his salary in a bank account every month.

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