Chapter 7 - Money Flashcards
Define bartering.
Swapping goods or services one person has for goods and services another person has.
Define legal tender.
A medium of payment obliged by law for meeting a financial obligation. Usually the notes and coins in the official currency of a country. Shopkeepers are obliged by law to accept as payment for goods and services.
Define the ECB.
The European Central Bank is the governing body of all European Union Central Banks and it is responsible for making financial decisions for the EU.
Define the EMU.
The Economic and Monetary Union.The 18 countries (including Ireland) that use a single currency, the euro.
What are the disadvantages of bartering?
- Both people involved in the barter must have a good or service of the other person needs/wants (Double Coincidence).
- Both items involved in the barter would have to be of equal value.
- The goods have to be carried around, which would be difficult if they are bulky.
What are the characteristics of money?
- Everyone has to accept it as payment for goods and services.
- It has to be easy to recognise, i.e. each note and coin has to be the same as all of the other notes and coins of the same value. For example, all €10 notes have to look the same and have equal value.
- It has to be easy to break down into smaller units, e.g. €1 = 100 cent.
- It has to be small, light and easy to carry around.
What are the advantages of a single currency to Ireland?
- Firms that import/export goods between Eurozone countries don’t have to worry about exchange rate costs. The firms know exactly how much the goods will cost and how much they will receive when they get paid.
- Irish firms that trade with other Eurozone countries save money, as they no longer have to pay commission for a changing currency.
- Ireland has lower interest rates than it had in the past.
- Ireland can expect to have lower inflation rates than it had in the past.
What is the currency of Austria?
Euro.
What is the currency of Belgium?
Euro.
What is the currency of Cyprus?
Euro.
What is the currency of Estonia?
Euro.
What is the currency of Finland?
Euro.
What is the currency of France?
Euro.
What is the currency of Germany?
Euro.
What is the currency of Greece?
Euro.
What is the currency of Ireland?
Euro.
