Which of the following is a primary characteristic of money?

The primary characteristic of money is its role as a medium of exchange. This means it serves as an intermediary instrument used to facilitate the sale, purchase, or trade of goods and services. Money provides a standardized unit that is widely accepted in transactions, which eliminates the inefficiencies of barter systems, where goods and services are exchanged directly.

By functioning as a medium of exchange, money simplifies trade by providing a common ground for valuing diverse goods and services, making economic interactions smoother and more efficient. This characteristic is essential for the functioning of modern economies, as it allows individuals and businesses to engage in commerce without the need for direct barter.

The other characteristics mentioned, such as inflation, volatility, and fungibility, while relevant to discussions about money, do not represent its primary purpose or defining feature. Inflation refers to the general rise in price levels over time, volatility pertains to the degree of price fluctuation, and fungibility refers to the property of money that allows it to be interchangeable and uniform across units. However, being a medium of exchange is the foundational characteristic that defines the very function of money in an economy.