Question

Statement (1): Medium of exchange is the tertiary function of money.

Statement (2): Store of value is the secondary function of money.

Options

• Both the statements are true.

• Both the statements are false

• Statement 1 is true, Statement 2 is false.

• Statement 2 is true, Statement 1 is false.

Answer 1

Statement 2 is true, Statement 1 is false.

Explanation:

• Statement (1): Money’s primary (or main) function, in addition to being a common measure of value, is to act as a medium of exchange. It is the most important role money can play in eliminating the need for a double coincidence of wants.
• Statement (2): Storing value is appropriately classified as a secondary (or subsidiary) purpose of money. These functions help the basic ones, enabling wealth to be transferred and kept efficiently across time without physical decay.