Financial markets and Financial assets

Question 1

Functions of money

Answer 1

-A medium of exchange
-A store of value or wealth
-A measure of value
-A standard of deferred payment

Question 2

Money as a medium of exchange

Answer 2

The primary function of money so we don’t need to barter for goods and services

Question 3

Money of a store of wealth

Answer 3

The most important function as if money didn’t retain its value, it would be useless. Most people store money as instead of investing in physical assets(cars) or financial assets(shares).

Question 4

Money as a measure of value

Answer 4

We use it as a way of comparing the value of different goods. They are units we use to measure the worth of items.

Question 5

Money as a standard of deferred payment

Answer 5

It means that transactions (goods for cash) do not always have to be simultaneous; credit is possible. You can obtain the goods now and use money to pay for them later.

Question 6

Money supply

Answer 6

The total amount of money in circulation or existence in a country.

Question 7

M0

Answer 7

Notes and coins in circulation plus banks operational deposits at the Bank of England

Question 8

M1

Answer 8

M0 and current account deposits

Question 9

M2

Answer 9

M1 and short term deposits

Question 10

M3

Answer 10

M2 and longer term deposits

Question 11

M4

Answer 11

All types of cash and deposits

Question 12

M4 deposit types

Answer 12

-Private sector retail banks and building society deposits
-Private sector wholesale banks and building society deposits
-Certificates of deposit