Cash and Money Flashcards
Legal Tender Define:
Medium of payment recognised by a legal system to be valid.
Example:
Cash (or currency) in the form of notes and coins.
Examples of Functions of Money:
- Standard of value
- Medium of exchange
- Store of value
Examples of Characteristics of Money:
- Durable
- Portable
- Widely accepted as method of payment
- Stable in value
- Easily divisible
- Difficult to counterfeit
What is Standard of value?
Money provides a common measure of the value of goods and services being produced.
What is Medium of exchange?
Money allows goods and services to be traded without the need for a barter system
What is Store of value?
Money generally holds its value over time (though inflammation can impact this); other items can act as stores of value eg artworks and land.
Durable Define:
Needs to withstand everyday wear and tear.
Portable Define:
Easy to carry around.
Widely accepted as method of payment Define:
eg everyone within a country agrees to accept the country’s currency as payment.
Stable in value Define:
Generally holds its value over time (ie not perishable)
Easily divisible Define:
It can be broken down into smaller denominations (eg notes and coins in different values)
Difficult to counterfeit Define:
Cannot be easily copied or reproduced - this maintains its value through scarcity.
