3.2.5-The Role of Money and Financial Markets Flashcards
What is a Deferred Payment?
Agreement between the lender and borrower allowing the borrower to pay for goods immediately and make payments in the future
What is Medium of Exchange?
Usually money that is used to exchange goods and services
What is Money?
The legal tender of the country, issued by the central bank, typically consisting of notes and coins
What is a Store of Value?
The function of an asset that can be saved, retrieved and exchanged at a later time
What is a Unit of Account?
Unit by which value of a good or service is accounted and compared
What are Building Societies?
Institution owned by its members as a mutual organisation
What are Commercial Banks?
Institution that provides services such as savings, products, loans, and investment products
What is the Bank of England?
The central bank of the United Kingdom
What is the Financial Sector?
Firms that provide financial services to customers; this includes banks and insurance companies
What are the 4 functions of money?
- Medium of exchange
- Store of value
- Unit of account
- Standard of deferred payment
What are the roles of the financial sector?
- Facilitating the exchange of products and services
- Allow saving
- Management of risk
- Offer advice
- Monitoring borrowers
What is the Money market?
- Money for short term loan finance for businesses and households
What is the Capital market?
Market for medium-longer term loan finance
What are foreign exchange markets?
A market where currencies are traded
What are commercial banks?
- Banks that provide deposit taking and lending
- Provide services to corporate and individual customers
- Make their profits by charging more interest on borrowing
