Read the following statements : Assertion (A) and Reason (R). Choose the correct option from those given below :
Assertion (A) : Money is of perishable nature and is generally accepted by all at any point of time.
Reason (R) : Money serves as a store of value, facilitating individuals to transfer purchasing power from the present to the future.
Read the following statements : Assertion (A) and Reason (R). Choose the correct option from those given below :
Assertion (A) : Money is of perishable nature and is generally accepted by all at any point of time.
Reason (R) : Money serves as a store of value, facilitating individuals to transfer purchasing power from the present to the future.
Options
Official answer
Correct option: (D) Assertion (A) is false, but Reason (R) is true.
Money is durable/non-perishable (not perishable) — durability is one of the essential qualities of good money, which is why it can act as a store of value. Reason (R) is a correct, independent statement about money's store-of-value function.
Marking scheme
- 1.1 mark for selecting option (D) — objective type question, no partial credit.
Hint
Recall the qualities of good money — durability is one of them, meaning money is the opposite of perishable.
Quick oral answer
Money must be durable, not perishable, to reliably act as a store of value — that is why the assertion is false while the reason about the store-of-value function remains true.
Common mistakes
- 1.Assuming any true-sounding reason automatically validates a false assertion, without independently checking the assertion.
- 2.Confusing 'general acceptability' (a true quality of money) with 'perishability' (a false quality), since both are combined in the same assertion.
Analysis and explanation
This is a factual/conceptual assertion-reason question on the qualities of money.
Why Assertion (A) is false
- One of the fundamental qualities of good money is durability (non-perishability) — money must retain its physical form and value over time to be useful.
- If money were perishable, it could not serve as a store of value or medium of exchange reliably; hence calling money "perishable" is factually incorrect.
Why Reason (R) is true
- The store of value function is a genuine, well-established function of money — it lets people hold wealth in money form and use it later, transferring purchasing power from the present to the future.
Why R does not/cannot explain A
- Since A itself is false, R cannot be its explanation; R is simply a true, standalone statement about a different quality/function of money (store of value, not perishability).
Interesting facts
Historically, commodities like cattle and grain were used as money but failed as they were perishable — this is precisely why durable metals like gold and silver, and later paper/digital money, replaced them.
Modern currency notes are printed on cotton-fibre paper (not wood-pulp paper) specifically to increase durability and resistance to wear.
Question details
Q2 of 37 questions
- Board
- CBSE
- Class
- Class 12
- Subject
- Economics
- Year
- 2026
- Section
- Section A
- Marks
- 1
- Chapter
- Money and Banking
- Topic
- Functions and Qualities of Money
- Bloom's level
- understand
- Syllabus topic
- Unit 3: Money and Banking — Qualities of Good Money and the Store of Value Function of Money
- Author
- CBSE
- Reviewed by
- Padhantu Academic Team
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Frequently asked questions
What are the essential qualities of good money?
Good money should be durable (non-perishable), portable, divisible, homogeneous, of stable value, scarce/limited in supply, malleable, cognizable and generally acceptable.
How does money serve as a store of value?
Money can be saved and held for future use without immediate spending, allowing individuals to transfer purchasing power from the present into the future, unlike perishable goods which lose value over time.