**Title: Understanding the Functions of Money****Scenario:**Aster won $5,000 on a slot machine. She deposits her $5,000 winnings into a money market fund so that she can use the money next year to help her pay for a new boat. This is an example of money serving as a(n):**Options:**- O investment good.- O unit of account.- O store of value.- O medium of exchange.**Explanation of Options:**1. **Investment Good**: This option suggests that money is being used to make a financial investment that may generate returns. However, in this scenario, Aster is depositing the money to use it directly in the future, not to generate an investment return.2. **Unit of Account**: This option indicates that money is being used as a standard numerical unit of measurement for the market value of goods, services, and other transactions. It does not directly apply to Aster’s situation.3. **Store of Value**: This option implies that money retains its value over time and can be saved and retrieved in the future. Aster’s action of depositing her winnings into a money market fund to use at a later date is a direct example of money serving as a store of value.4. **Medium of Exchange**: This option means that money is used to facilitate the sale, purchase, or trade of goods between parties. This does not directly relate to Aster's action of depositing the money for future use.**Correct Answer:**O store of value.**Explanation:**In the given scenario, Aster deposits her $5,000 winnings into a money market fund with the intention of using it next year. This action showcases one of the principal functions of money: serving as a store of value. By placing her money in a secure fund, Aster ensures that her money maintains its value until she is ready to use it to purchase a new boat. In this context, money facilitates the preservation of purchasing power over time.**Educational Context:**Understanding the different functions of money is crucial in economics and finance. Money acts as a medium of exchange, a unit of account, a store of value, and occasionally, a standard of deferred payment. Grasping these roles helps in comprehending how financial systems operate and how individuals and institutions manage and utilize their resources effectively.

If an individual uses the money to purchase a good as an investment to get more returns in the…

Aster won $5,000 on a slot machine. She deposits her $5,000 winnings into a money market fund so that she can use the money next year to help her pay for a new boat. This is an example of money serving as a(n) O investment good. unit of account. store of value. O medium of exchange.

Aster won $5,000 on a slot machine. She deposits her $5,000 winnings into a money market fund so that she can use the money next year to help her pay for a new boat. This is an example of money serving as a(n) O investment good. unit of account. store of value. O medium of exchange.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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