Fig. 1 shows a new digital-finance kiosk at a bus terminal. It lets consumers deposit cash, transfer money, buy government savings certificates and check th...

(a) The kiosk supports money's role as a medium of exchange, because consumers can transfer money and make payments. [1] It also supports money as a store of value, because consumers can deposit cash or use savings certificates to hold value for the future. [1] Unit of account and standard of deferred payment are also acceptable functions.

(b) A government savings certificate is a financial asset: the consumer lends funds to the government. Cash at home is physical money held directly by the consumer. [1] The certificate pays interest, so it can generate a return. [1] However, cash is immediately available for spending, while a certificate may have to be sold or held until maturity before the funds can be accessed. [1]

(c)

\[\$1500\times\frac{4}{100}=\$60\]

The interest earned in one year is $60. [2]

(d) A well-functioning financial market allows savers to supply funds and earn interest or other returns. [1] It allows the food-processing firm to obtain finance for its new packaging line. [1] This investment may raise output, productivity or profit. [1] Market prices and information help direct funds towards firms and projects expected to generate returns, improving allocation of resources. [1]

(e) The kiosk could raise welfare by making payments easier, providing safer saving than keeping cash, reducing travel costs, and giving residents access to investment information. It may also improve local firms' access to finance. [2] However, fraud, service charges, unreliable systems, and exclusion of residents with limited digital skills could reduce these gains. [1] Overall, welfare is likely to rise if users receive suitable digital training and strong consumer protection against fraud is provided. [1]