A1: Functions and Roles of Money Flashcards
Understanding what "money" is and what its used for
What are the four functions of money?
Unit of Account
Means of exchange
Store of Value
Legal Tender
How is the Role of money affected and influenced?
Personal attitudes towards money; spending and saving.
Life stages such as adolescence, middle age and old age.
Life events
Trends
Interest Rates
How could a person plan their expenditure?
Remaining solvent
Set financial goals and targets
Maintain a good credit rating
Control costs
What are the advantages and disadvantages of a mortgage?
Advantages:
Spreads the cost over a long period of time
Disadvantages:
Need a deposit usually around 20% of the items value to have a mortgage.
What are the advantages and disadvantages of a payday loan?
A short-term loan for small amounts of money to be repaid on next wage
Advantages:
Quick access to funds
Disadvantages:
High rates of interest as banks know you need the money
What are the advantages and disadvantages of bonds and gilts?
Lending that happens over a period of time in return for intrest
Advantages:
Secure
Interest back
Disadvantages:
Risking government with your money
Money is only given back when “matured”
What are the advantages and disadvantages of shares?
Advantages:
Instant access to sums of money
Disadvantages:
Equity is needed to be paid to shares by the business
What are the advantages and disadvantages of a pension?
Advantages:
The government and employers chip money into your pension
Disadvantages:
Cant be given to you until you hit “old age”
Tax is added onto 3/4 of pension savings
