1.1 - Functions of money

Question 1

Acceptable

Answer 1

Key features of money – to be widely accepted

Question 2

Barter

Answer 2

To exchange goods and services for other goods and services without money

Question 3

Current Account

Answer 3

Bank or building society accounts where people can store money in forms of electronic balances and withdraw it to make payments

Question 4

Denomination

Answer 4

Group of coins or banknotes that share the same face value

Question 5

Divisible

Answer 5

Key feature of money - to be easily divided into amounts of different value

Question 6

Double coincidence of wants

Answer 6

Actions when bartering, when 2 people both have goods or services they can trade and both want

Question 7

Durable

Answer 7

Key feature of money - can be used in multiple translations without breaking

Question 8

Face value

Answer 8

Value marked on a coin or bank note

Question 9

fiduciary value

Answer 9

value based on trust of the banking system

Question 10

homogeneous

Answer 10

key feature of money - to look and feel the same as money of the same denomination

Question 11

inflation

Answer 11

rise in prices, meaning purchasing power of money falls

Question 12

intrinsic value

Answer 12

The value that an item has in itself, eg a bag of rice has intrinsic value because it is a staple food; a solid gold coin has intrinsic value because it is made of a precious metal; a banknote does not have intrinsic value because it is a piece of paper or polymer.

Question 13

legal tender

Answer 13

coins of banknotes that must be accepted if offered as a form of repaying debt

Question 14

means of exchange

Answer 14

function of money - allows people to make payments

Question 15

money

Answer 15

anything widely accepted as a form of making payments

Question 16

payment mechanism

Answer 16

a means of transferring money from one account to another

Question 17

portable

Answer 17

key feature of money - must be light and small

Question 18

purchasing power

Answer 18

a quantity of goods or services that money can buy

Question 18

purchasing power

Answer 18

a quantity of goods or services that money can buy

Question 18

purchasing power

Answer 18

a quantity of goods or

Question 19

rate of exchange

Answer 19

how much one item is worth in terms of an other item

Question 20

recognisable

Answer 20

key feature of money - must be easily identified as real money

Question 21

representational value

Answer 21

The value that an item represents rather than the value it has in itself: a banknote is just a piece of paper or polymer but it represents the value that is printed on it.

Question 22

scarce but sufficient

Answer 22

key feature of money - to be available to in sufficient quantities to meet peoples needs but scarce enough so the value of money doesn’t fall

Question 23

store of value

Answer 23

an attribute of money that allows people to store it and spend it at a later date

Question 24

transaction

Answer 24

buying or selling something

Question 25

unit of account

Answer 25

function of money - to allow people to compare prices and to measure the value of money in a bank account