Easy2 marksStructured
AQA GCSE · Question 16 · How the economy works
State two functions of money.
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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