Money's role in eliminating barter limitations

Steps:

• Recall barter trade requires double coincidence of wants, where both parties desire each other's goods simultaneously.
• Money functions as a medium of exchange by serving as an intermediary accepted by all, bypassing this requirement.
• Evaluate statement C: It wrongly attributes the barter flaw to money's use.
• Confirm other statements align with economic principles on purchasing power, liquidity, and store of value.

Why C is correct:

• By definition, money as medium of exchange resolves the double coincidence of wants problem in barter systems, as outlined in standard economic theory (e.g., Mises' regression theorem).

Why the others are wrong:

• A: Deflation lowers prices, increasing money's purchasing power (inverse to price level).
• B: Financial assets (e.g., stocks, bonds) convert to cash faster than most physical assets (e.g., real estate).
• D: As a store of value, money requires scarcity to preserve worth, not unlimited supply, which would cause hyperinflation.

Final answer: C