How rapid inflation can undermine moneys ability to perform each of the three function?

Answer 1

Money is used as a medium of exchange for goods and services, as a unit of account for expressing price, and as a store of value.

People will only accept money in exchange for goods and services and for the work they perform if they can be reasonably certain that the medium of exchange money will retain its value until they are ready to spend it. In runaway inflation's of the thousands or tens of thousands of percent a year, people revert to barter.

Again, drastic inflation greatly reduces money's use as a measure of value, for it is impossible to adjust instantaneously all prices strictly in line with their relative values. Thus, opportunities are afforded to speculators to profit at the expense of the less sophisticated who, eventually, will learn to distrust money's usefulness as a measure of value.

Finally, and most obviously, money's usefulness as a store of value is destroyed in a drastic inflation. The "rule of 70" is instructive here. By dividing the absolute inflation rate into 70, one can estimate how long it takes ones dollar savings to lose half their purchasing power. At 7 percent inflation, the dollar will be worth half as much in ten years.