Question

Austin purchases a truck for $25,000 using funds borrowed from Chase bank. In exchange, Austin will pay $450 per month until the loan is paid off. This is an example of money functioning as a

A. store of value

B. standard of deferred payment

C. Medium of exchange

D. Unit of account

Answer 1

Austin purchases a truck for $25,000 using funds borrowed from Chase bank. In exchange, Austin will pay $450 per month until the loan is paid off. This is an example of money functioning as a standard of deferred payment. Money makes lending and borrowing easier. The payments which are postponed for future or which are to be made in future are called deferred payments. Austin has taken a loan which he will pay back in the future. This is an example of money functioning as a standard of deferred payment. Hence the correct option is B.