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Question 1

What is money?

Answer 1

Money is a medium of exchange in the form of coins and banknotes that is generally recognised in payment for goods and services.

Question 2

What are the 4 functions of money?

Answer 2

Unit of account
Means of exchange
Store of value
Legal tender

Question 3

What does unit of account mean?

Answer 3

It allows us to place a monetary value on goods and services.

Question 4

What is an example of unit of account?

Answer 4

Chocolate bar = 75p

New car = £16,000

Question 5

What does means of exchange mean?

Answer 5

• It allows us to trade

- Business and people can buy and sell goods and services using money

Question 6

What is an example of means of exchange?

Answer 6

Purchasing your lunch

Paying to go to the cinema

Question 7

What does store of value mean?

Answer 7

It allows us to use it in the future as it keeps its value.

Question 8

What is an example of store of value?

Answer 8

Can be money in a bank or a piggy bank which you can use to buy goods and services in the future.

Question 9

What does legal tender mean?

Answer 9

• It is a legally recognised form of payment.

- Money is widely recognised and used for all sorts of transactions.

Question 10

What is a use of legal tender?

Answer 10

To buy a house, paying for a haircut or receiving your wages.

Question 11

What factors affect peoples opinion towards risk?

Answer 11

• How they were brought up

- Life stages

Question 12

What does life stages mean?

Answer 12

As you grow up from childhood to adulthood your financial needs change.
Your attitude changes as well.

Question 13

What are the 5 different life stages?

Answer 13

• Childhood
• Adolescence
• Young adult
• Middle age
• Old age

Question 14

What are the financial needs in childhood?

Answer 14

• Limited needs
• Mainly reliant on parents
• Many want to buy sweets or toys

Question 15

What are the financial needs in adolescence?

Answer 15

There is a need to be more independent and therefore you are likely to be slightly less reliant on parents.

Question 16

What are the financial needs in young adult?

Answer 16

• University or starting a career
• Become more financially independent
• looking to settle down and start a family

Question 17

What are the financial needs in middle age?

Answer 17

• Support family

- Starting saving for children’s futures

Question 18

What are the financial needs in old age?

Answer 18

• Fewer dependents
• More downsize house
• Fewer financial needs

Question 19

How does culture change the attitudes towards money?

Answer 19

Different cultures, affected by tradition, religion and ethical belief will have different attitudes.

Question 20

What is an example of culture affected attitudes?

Answer 20

The older generation of Chinese people have a culture of saving. However the younger generation are willing to spend more and even use credit.

Question 21

How does life events influence peoples attitudes on money?

Answer 21

If you start to go it to debt as soon as you are able to save money for your future.

Question 22

How do external influences influence peoples attitudes on money?

Answer 22

These are factors outside your control.

Question 23

What is an example of external influence?

Answer 23

The state of the economy. In times of recession people will be reluctant to spend and save their money for rainy days.

Question 24

How do interest rates influence peoples attitudes on money?

Answer 24

High Interest rates = Savers will benefit
High interest rates = loaners will lose out
Low interest rates = Savers lose out
Low interest rates = Loaners will benefit

Question 25

Why is it important to plan expenditures?

Answer 25

Avoid bankruptcy 
Maintain a good credit rating 
Remain solvent (Keep money)
Avoid getting into debt
Control costs

Question 26

What does debt mean?

Answer 26

Debt is money owed to someone.

Question 27

What does credit rating mean?

Answer 27

Score given to individuals on how likely they are to repay debts based upon their previous actions.

Question 28

What is an example of credit rating?

Answer 28

Experian and Clearscore

Question 29

What does bankrupt mean?

Answer 29

When an individual or organisation legally states it’s inability to pay its debt.

Question 30

What does solvent mean?

Answer 30

The ability to meet day to day expenditure and repay debts.