A1 - functions + role of money

Question 1

Functions of money (4)

Answer 1

• Unit of account = monetary value placed on goods and services, allowing for comparison and transactions
• means of exchange = Trade goods for goods/money
• store of value = money doesn’t loose value, rising inflation
• legal tender = money legally recognised form of payment

Question 2

factors effecting role of money (6)

Answer 2

• personal attitudes = different views from people of affluent/poor backgrounds
• life stages = infant, teen, family, elderly
• culture = significant how much spent, Eg: Muslim no interest charity donations instead
• life events = un/planned, requires significant amount money
• external influences = can’t control, Eg: Brexit, inflation
• interest rates = reward saving + cost borrowing

Question 3

why planning expenditure

Answer 3

• avoid debt
• control costs
• avoid legal action
• remain solvent
• maintain good credit score
• avoid bankruptcy
• manage money to fund purchases
• generate income/savings
• set financial targets/goals
• provide insurance against loss/ill
• counter effects inflation