chapter 1

Question 1

direct production

Answer 1

this is producing enough for surviving but not improving your way of life

Question 2

barter

Answer 2

the exchange of one thing for another without the use of money

Question 3

disadvantages of barter

Answer 3

~a person would have to find someone who wanted their surplus but also had something you wanted.
~traders have to negotiate the exchange rate of each others goods.
~their is no storage of wealth meaning good could not be stored and sold at a later date.

Question 4

The characteristics of money

Answer 4

Durable
Acceptable
Exchangeable
Divisible
Scarce
Portable
Homogenous

Question 5

what are the functions of money

Answer 5

medium of exchange
measure of value
store of value
a standard for postponed payment

Question 6

bill of exchange

Answer 6

this is a document that is commonly used in the settlement of international debt. It is made out by the seller. It requires the buyer to pay a sum of money on demand or on an agreed future date. both the buyer and the seller benefit. The buyer can obtain credit on the transaction because instead of waiting for payment the seller can sell the bill at a discount or us it as collateral agents a bank loan. The seller is assured of payment and the buyer gets time to pay off the debt.

Question 7

documentary credit

Answer 7

This is is one of the most secure methods used in this context. It enables exporters to obtain payment before the documents of ownership are released to the importer. The importer arranges for their bank to guarantee that the payment will be made when documents of title are handed over. In this way, both the exporter and importer are safeguarded and encouraged to trade.

Question 8

electronic funds transfer(EFT)

Answer 8

this is the electron exchange or transfer of money without any paper money changing hands.

Question 9

credit cards

Answer 9

these are operated by banks and credit card companyies. They enable the holder to buy goods and services from traders without using cash or cheques.

Question 10

debit cards

Answer 10

Transactions using debit cards are a facility provided by banks to their account holders. it allows the holder to make purchases at home or abroad and connect directly with their account to make an instant payment to a trader without using a cheque or cash

Question 11

standing order

Answer 11

A convenient way to make payments where a regular amount has to be paid. It avoids the need to write out and post a cheque on a specific date of every month.

Question 12

Direct debit

Answer 12

this is a variation of the standing order service. Instead of the account holder instructing the bank to make regular payments on their behalf, they compete and sign a form that allows someone else to withdraw amounts from their account at regular intervals.

Question 13

direct deposits

Answer 13

typicaly used by employers to pay the wages of many employees payments are deposited straightinto into employees bank account via EFT

Question 14

E-commerce

Answer 14

buying and selling of products through an electronic medium such as the internet

Question 15

telebanking

Answer 15

a facility provided by banks that enables bank customers to use an appropriate type of telephone to access some services such as account balances, transfer of funds, payment of bills,some enquirers about their accounts

Question 16

cheques

Answer 16

These are slips of paper that a bank costumer fills out and signs to instruct their bank to do something with their bank account.

Question 17

money orders

Answer 17

these are printed order for payment of a specific sum and facilitated by a bank or post office

Question 18

Telegraphic money transfer

Answer 18

used when a sender needs to send money electronically to someone in their currency.

Question 19

bank drafts

Answer 19

these are a form of cheque drawn on the issuing bank into rather than the bank customer`s bank account

Question 20

m-money

Answer 20

an app running on a mobile device such as a smartphone that allows users store,send and recieved money.