one of the major functions of money is?

Step 1: Analyze the question The question asks for a major function of money. A function is something money does, as opposed to a quality or characteristic it should have.

Step 2: Recall the concept The main functions of money are:

1. Medium of exchange: it is used to buy and sell goods and services, which removes the problems of barter.
2. Unit of account (measure of value): it is used to express prices.
3. Store of value: it lets purchasing power be saved for the future.
4. Standard of deferred payment: it is used to settle debts later.

Step 3: Check each option

• A. Medium of exchange: This is a function of money. It is the primary and most important one.
• B. Stable in value: This is a characteristic of good money, not a function.
• C. Store of value: This is also a function of money, so it is a valid statement. However, it is a secondary function, and "medium of exchange" is the main one that defines money.
• D. Acceptance by the central bank: This is not a function. Money's acceptability matters, but it is general acceptability, not acceptance by the central bank.

Step 4: Choose the answer Both A and C describe functions of money. The question asks for one of the major functions, and the key function is the medium of exchange, since it is the reason money exists and what replaced barter.

Exam tip: Separate functions (what money does) from characteristics (what money should be, such as durability, portability, divisibility, stability, and acceptability). If a question asks for the primary function, pick medium of exchange. Remember the functions with MUSD: Medium, Unit of account, Store of value, Deferred payment.