The correct answer is 1 only. Explanation & Key Takeaways: Money and Functions: • Money is a commonly accepted medium of exchange. • Money is anything that can be generally accepted as payment for goods and services or settlement of debts. • Money is the most liquid (it is easy to sell in the market like gold, silver etc.) of all assets in the sense that it is universally acceptable and hence can be exchanged for other commodities very easily. Primary Functions: • The measure of value- Money serves as a common measure of value or unit of account so, the relative comparison of goods is possible. This is possible because of the Divisibility & Fungibility of money. Hence, statement 2 is the primary function of money. • Medium of exchange (transaction) – people can easily exchange goods and services with money. Hence, statement 3 is the primary function of money. Secondary Functions: • Store of Value- It can be kept as savings (in a bank account) and could be used for investment purposes e.g. buying property. Its storage costs are also considerably lower. • Transfer of Value- money has the same value throughout the country and its value is transferrable. • Deferred Payment- Money also serves as a standard mode of deferred payments. Time value of Money, for instance, Credit card, EMI etc. If a loan is taken today, it can be paid back in future using money. Contingent Functions: • It is the Basis of the credit system and Financial markets. • National Income Distribution • Credit Creation • Money maximizes the satisfaction of producers and consumers.