Question

Mention two contingent functions of money.

Hint:

Contingent functions are the "advanced" jobs of money, like enabling loans (credit) and paying salaries (distributing income).

Answer 1

Contingent functions are secondary functions that money performs in modern, complex economies. Two important contingent functions are:

Basis of the Credit System: Money is the foundation of the entire credit system. Banks create credit based on their cash deposits, and financial instruments like cheques and bills of exchange are expressed and settled in monetary terms.
Distribution of National Income: Money facilitates the distribution of national income among the factors of production. Factor payments like wages, rent, interest, and profit are all calculated and paid in the form of money.