Chapter 7 - Money

Question 0

What is bartering?

Answer 0

Swapping goods or services one person has for goods or services another person has.

Question 1

What is money?

Answer 1

Anything of value that is widely accepted as payment for goods and services.

Question 2

What is legal tender?

Answer 2

A medium of payment allowed by law for meeting a financial obligation. Usually the notes and coins in the official currency of a country.

Question 3

What is the ECB?

Answer 3

The European Central Bank is the government body of all EU central banks and it is responsible for making financial decisions for the EU.

Question 4

What is the EMU?

Answer 4

The Economic and Monetary Union. The 18 EU countries including Ireland that use the currency the euro.

Question 5

What are the disadvantages of bartering?

Answer 5

1. Double coincidence of needs and wants.
2. Bothe items have to be of equal value.
3. Goods have to be carried around, which could be difficult if bulky.

Question 6

What are the characteristics of money?

Answer 6

1. Everyone has to accept is as a payment.
2. Easy to recognise i.e. each note and coin have to be the same a s all other notes and coins with the same value e.g. all €100 notes have to look the same and have the same value.
3. It has to be easy to break down into smaller units e.g. €1 = 100 cent
4. It has to be small, light, and easy to carry around.

Question 7

What are the advantages of single currency?

Answer 7

1. Firms that import/export between eurozone countries know how much goods will cost because they don’t have to worry about exchange rates.
2. Irish firms that trade with eurozone countries no longer have to pay commission for changing currency.
3. Ireland has lower interest rates than in the past.
4. Ireland can expect lower inflation rates than in the past.

Question 8

What are the EU countries using the euro?

Answer 8

Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Luxemberg, Malta, Netherlands, Portugal, Slovakia, Slovenia, Spain.

Question 9

What are the EU countries not using the euro?

Answer 9

Lithuania - Litas
United Kingdom - Pound Sterling
Denmark - Krone
Sweeden - Krona
Czech Republic - Czech Crown
Hungary - Florint
Poland - Zloty
Romania - Leu
Bulgaria - Lev