Stephen got his paycheque on Friday. After a good time at the ballgame on Saturday, he purchased some groceries, rented a video, and made his car payment. This illustrates the ________ function of money.

Question

Quizplus · Accepted Answer

Stephen used his paycheque to purchase groceries, rent a video, and make a car payment. In this scenario, money is being used as a medium of exchange, allowing Stephen to acquire the goods and services he needs by exchanging his money for them.

Other options can be eliminated:

A) store of value: This refers to money's ability to hold purchasing power over time. There is no indication in the scenario that Stephen is saving or storing his money for later use.

B) basis for banking system: This refers to the fractional reserve banking system, which is based on banks being able to lend out a portion of the deposits they receive from customers. While money is certainly a foundation for banking, this idea is not illustrated in the scenario.

D) payment for labour: This refers to money being used as a compensation for work. While the scenario mentions Stephen receiving a paycheque, it does not indicate that he is using that money to pay for someone else's labour.

E) unit of account: This refers to money being able to measure and compare the value of different goods and services. While money is certainly a unit of account, it is not illustrated in the scenario.

Stephen Got His Paycheque on Friday