The question was very popular with the candidates but not well tackled. Majority of the candidates displayed limited knowledge of how inflation could affect the functions of moneylisted in the (a) part of the question. However, few candidates stated the following to score high marks in the (b) part or the question.

tlow inflation affc;cts money as a measure of value
Since inflation reduces the value of money, its function as a measure 01' value is affected. If the inflation is general, prices may rise to the same extent so that relative values or commodities would remain unchanged. On the other hand. il tile inllation affects some commodities more than others then the relative values between commodities would change.

How inflations affects money as a store of value

When there is inflation money loses value. More money is exchanged lor a particular commodity. In other words, a given unit of money exchanges lor less goods. In such circumstances people hesitate to store their wealth in terms or money. The money saved would lose part of its value. It would exchange for less output in future than now. In such circumstances people prefer to save in terms or assets which are likcl, to appreciate
in value like land and buildings.