WAEC Economics 2015 Theory — Question 19
Question 19 of 22 from the West African Examinations Council (WAEC) Economics 2015 Theory paper, with the correct answer and a full explanation.
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7(c). Explain the ways in which inflation affects the functions of money.
Model answer
(i) It discourages the use of money as a store of value, because the value of money falls consistently over time, making it not worthwhile to continue holding wealth in money form. (ii) It discourages money as a standard for deferred payment, because people will not want to wait to receive money (as it loses value over time) and will demand instant payment instead.
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