2.5 Role of Money Flashcards
What is the definition of money
an asset that can be used as a medium of exchange
What is classified as money
bank notes
coins
saving and current accounts
What is not classed as money but is just a means of accessing
Credit and debit cards
Cheques
What is the first function money which is better than a barter system
MEDIUM OF EXCHANGE
money allows good and service to be traded without barter system
What are the negatives of a barter system
rely on double coincidence of wants between the two people involved
e.g fisherman will need to want the bread and the baker will need to want the fish
What is the second function of money that helps its longevity
STORE OF VALUE
money can store wealth so it can be retrieved and exchanged at later dates
What is the third function of money and the one that helps understanding
UNIT OF ACCOUNT
money acts as a measurement of the value of a good/service
What is the fourth function of money and one associated with standards
STANDARD OF DEFERRED PAYMENT
money is widely accepted to value a debt so people can obtain immediately and pay back later
