Inflation reduces the ability of money to function as a
A) medium of exchange.
B) medium of value.
C) unit of account.
D) store of value.

Question

Quizplus · Accepted Answer

Inflation reduces the purchasing power of money over time, which means that the value of money as a store of value decreases. Choice A is incorrect because inflation does not affect the ability of money to be exchanged for goods and services. Choice B is incorrect because inflation does not affect the ability of money to represent value. Choice C is also incorrect because inflation does not affect the ability of money to be used as a unit of measurement for prices and transactions.

Inflation Reduces the Ability of Money to Function as a