When high inflationary pressure erodes domestic purchasing power, retail vendors may still accept physical bank notes for immediate over-the-counter sales, but credit institutions strictly refuse to grant long-term loans or record deferred debts denominated in that national currency. In this situation, which statement accurately distinguishes between the functional state of money's primary and secondary roles?
- Money continues to perform its primary function as a medium of exchange, but its secondary function as a standard of deferred payment has broken down.Cevap
- BMoney continues to perform its secondary function as a store of value, but its primary function as a unit of account has broken down.
- CMoney continues to perform its secondary function as a standard of deferred payment, but its primary function as a medium of exchange has broken down.
- DMoney continues to function as a capital market debt instrument, but fails to operate as a money market liquidity tool.
Cevap
Money continues to perform its primary function as a medium of exchange, but its secondary function as a standard of deferred payment has broken down.
The scenario describes spot market transactions continuing while long-term debt agreements in the domestic currency are rejected. Facilitating immediate trade is the primary function of money as a medium of exchange. In contrast, settling credit obligations payable in the future represents the secondary function known as a standard of deferred payment. High inflation undermines future purchasing power, destroying the standard of deferred payment function while the medium of exchange function persists for spot transactions.
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Anahtar Kavram
Classification of primary vs. secondary (derivative) functions of money under economic instability.