Charlie received $500 from his grandfather for his 18th birthday. Charlie decides to use the $500 as a down payment on a new Ford F250 Truck. Charlie used his $500 as...

Question

A medium of exchange

A store of value

A unit of account

Answer 1

Charlie used his $500 as a medium of exchange.

In this context, the $500 serves as a means to facilitate the transaction of purchasing the truck, allowing Charlie to exchange it for the vehicle.

• A store of value refers to an asset that can maintain its value over time (like savings or investments).
• A unit of account is a standard numerical unit of measurement that provides a consistent measure of value (like how prices are listed).

In this case, since he is using the money to complete a transaction, it is primarily functioning as a medium of exchange.