Easy2 marksStructured
How the economy worksMoneyFinancial Sector

AQA GCSE · Question 16 · How the economy works

State two functions of money.

How to approach this question

Recall the four main functions of money and state any two of them.

Full Answer

1. A medium of exchange. 2. A store of value.
Money has four main functions: 1. **Medium of exchange:** It is widely accepted as a form of payment for goods and services, eliminating the need for a barter system. 2. **Store of value:** It can be saved and used for future purchases, holding its value over time (assuming low inflation). 3. **Unit of account:** It provides a common measure of the value of goods and services, allowing for easy comparison. 4. **Standard of deferred payment:** It can be used to settle debts in the future.

Common mistakes

Giving characteristics of money (e.g., portable, divisible) instead of its functions.

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