Inflation Erodes Money's Value for Savers

Steps:

• Recognize that savers hold money over time, expecting it to retain worth.
• Recall money's functions: medium of exchange for transactions, unit of account for pricing, store of value for saving, and means of deferred payments for debts.
• Note inflation at 4% reduces purchasing power, so saved money buys less later.
• Match to store of value, as it fails when inflation rises.

Why C is correct:

• Store of value requires money to maintain purchasing power over time; inflation violates this by eroding real value, directly harming savers per economic definitions.

Why the others are wrong:

• A: Means of deferred payments involves settling future debts; inflation aids debtors, not savers.
• B: Medium of exchange facilitates immediate trades; unrelated to long-term saving losses.
• D: Unit of account provides a pricing standard; inflation distorts prices but doesn't explain savers' suffering.

Final answer: C