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

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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