Functions of Money

Question 1

Functions & Role of Money

Answer 1

Money flows in two directions; into your ownership & out
Money comes from various sources including:
Wages
Gifts
Savings
Money goes out to pay for necessities and wants

Question 2

Unit of Account:

Answer 2

It allows us to place a monetary value on goods and services
The price of goods and services show the unit of account, for example a chocolate bar is 60p or a new car £30,000

Question 3

Means of Exchange:

Answer 3

It allows us to trade
Businesses and customers can buy and sell goods and services using money, for example when you purchased your lunch yesterday or paid to go to the cinema

Question 4

Store of Value:

Answer 4

It allows us to use it in the future as it keeps it value
You might have money saved in your ‘piggy bank’ which you can then use to buy goods and services in the future

Question 5

Legal Tender:

Answer 5

It is a legally recognised form of payment
Money is widely recognised and used for all sorts of transactions from buying an ice cream or getting a haircut to paying a deposit on a house and receiving your wages