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Question 1 (a) Elaborate on the FOUR (4) main functions of money. [16 marks] (b) Elaborate on the...

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Economics

Question 1

(a) Elaborate on the FOUR (4) main functions of money. [16marks]

(b) Elaborate on the TWO (2) main components of money based onthe narrowest definition of money. [14 marks]

Question 2

(a) Explain on the impact of a drop in the discount rate on thesupply of money in the market. [15 marks]

(b) Based on your answer above, select an economic problem wherethat impact would work and explain what happens.

[15 marks]

Answer & Explanation Solved by verified expert
4.4 Ratings (590 Votes)
Functions of money 1 Medium of exchange Money acts as a medium of exchange to facilitate transactions When there was no money transaction was conducted by exchange of goods and services called barter system The barter system was good but one difficulty was in order to get a particular commodity one must have a good or service of equal value which the supplier also wants In other way it can be described as in barter system transaction is possible if there is a double coincidence of wants This problem is solved by money it acts as a medium of exchange to make possible all types of transactions by all parties regardless of their demand for each    See Answer
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