Question

Question 1
(a) Elaborate on the FOUR (4) main functions of money. [16 marks]
(b) Elaborate on the components of M2 in the Malaysian context. [You may
need to refer to Bank Negara Malaysia’s report] [14 marks]

Answer 1

I can give answer of question one

Main four functions of money are

Medium of Exchange: When money is used to intermediate the exchange of goods and services, it is performing a function as a medium of exchange.

Unit of Account: It is a standard numerical unit of measurement of market value of goods, services, and other transactions. It is a standard of relative worth and deferred payment, and as such is a necessary prerequisite for the formulation of commercial agreements that involve debt. To function as a unit of account, money must be divisible into smaller units without loss of value, fungible (one unit or piece must be perceived as equivalent to any other), and a specific weight or size to be verifiably countable.

Store of Value: To act as a store of value, money must be reliably saved, stored, and retrieved. It must be predictably usable as a medium of exchange when it is retrieved. Additionally, the value of money must remain stable over time.

A standard of deferred payments (this is not considered a defining purpose of money by all economists