1. Explain 2 principal functions of money within the economy? (4)

2. Explain what is meant by informational asymmetries. What problems can these asymmetries create for participants in the money and capital markets? (6)

3. What are the functions or roles played by the rate of interest in the economy and financial system? (6)

4. Differentiate inflation and deflation, which is better for the economy. (4)