Functions and Role of Money Flashcards

1
Q

Unit of Account

A

Allows a monetary value to be placed on goods & services

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2
Q

Means of Exchange

A

Enables businesses to trade with other businesses and customers

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3
Q

Store of Value

A

Allows businesses and customers to use it in the future as it keeps value

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4
Q

Legal Tender

A

Method of payment - allows us to pay later

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5
Q

Personal Attitudes

A

Depends on family’s attitudes or your own attitudes.

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6
Q

Life Stages

A

Childhood, adolescence, young adult, middle age & old age

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7
Q

Culture

A

Different cultures, affected by tradition, religion and ethical beliefs, will have different attitudes to money.

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8
Q

Life Events

A
  • Within your control, for example going to university, travelling abroad, getting married or starting a family.
  • Outside your control, for example illness, financial gains or losses.
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9
Q

External Influences

A

Factors outside your control, including the state of the economy, will have an impact

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10
Q

Interest Rates

A

The cost of borrowing money or the reward for saving money

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11
Q

How does interest rates impact the role of money?

A

Low interest rates - may be more willing to borrow money or spend on Credit
High Interest Rates - there is more of an incentive to save.

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12
Q

Which life stage does this refer to?

Financial Needs/Implications?

  • Limited needs
  • Mainly reliant on parents
  • May want to buy sweets or toys
A

Childhood - Financial Needs

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13
Q

Which life stage does this refer to?

Financial Needs/Implications?

  • Money received from presents may be spent as attitude will be that this is to buy things you want
  • May be encouraged to save or parents or grandparents may set up a savings account for you into which they make regular payments
  • May rely on pocket money
A

Childhood - Implications

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14
Q

Which life stage does this refer to?

Financial Needs/Implications?

• Want to be more independent
• Slightly less reliant on parents as want to
socialise away from family

A

Adolescence - Financial Needs

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15
Q

Which life stage does this refer to?

Financial Needs/Implications?

  • May look for a part-time job
  • Still partially reliant on pocket money
  • More likely to receive cash as gifts and may be willing to save up smaller amounts in order to make bigger purchases
A

Adolescence - Implications

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16
Q

Which life stage does this refer to?

Financial Needs/Implications?

• University or starting a career
• Looking to be more independent
• Buying a car and buying or renting a flat or
house
• Looking to settle down and maybe get
married or start a family
A

Young adult - Financial Needs

17
Q

Which life stage does this refer to?

Financial Needs/Implications?

• May take a student loan if going to university
• Borrow money to pay for a car or purchase one on a
finance deal
• May be looking at taking out a mortgage
• Need to earn money to support self and others
• Eligible for credit and debit cards

A

Young adult - Implications

18
Q

Which life stage does this refer to?

Financial Needs/Implications?

• Support family
• Start saving for children’s futures, e.g.
university, weddings, etc.
• Look to improve own lifestyle, e.g. new car or
move house
• Enjoy having access to additional money to
spend on luxuries such as foreign holidays

A

Middle age - Financial Needs

19
Q

Which life stage does this refer to?

Financial Needs/Implications?

• Savings accounts for specific purposes
• Paying a mortgage
• Planning for own future through pensions and retirement plans
• Likely to be the stage of life when income peaks but
matched with high expenditure

A

Middle age - Implications

20
Q

Which life stage does this refer to?

Financial Needs/Implications?

• Fewer dependents
• May downsize, e.g. move from family home
to a smaller retirement home
• Fewer financial needs for assets but may be
higher for services such as health care

A

Old age - Financial Needs

21
Q

Which life stage does this refer to?

Financial Needs/Implications?

  • Mortgage payments stop or become lower
  • Less income as reliant on a pension rather than a salary
A

Old age - Implications

22
Q

State two IMPLICATIONS of a YOUNG ADULT

A

Either two from:
• May take a student loan if going to university
• Borrow money to pay for a car or purchase one on a
finance deal
• May be looking at taking out a mortgage
• Need to earn money to support self and others
• Eligible for credit and debit cards

23
Q

State two FINANCIAL NEEDS of MIDDLE AGE

A

Either two from:
• Support family
• Start saving for children’s futures, e.g.
university, weddings, etc.
• Look to improve own lifestyle, e.g. new car or
move house
• Enjoy having access to additional money to
spend on luxuries such as foreign holidays

24
Q

What is Debt?

A

Money owed

25
What is a Credit rating?
A score given to individuals on how likely they are to repay debts based upon their previous actions.
26
What does the term Bankrupt mean?
When an individual or organisation legally states its inability to repay debts.
27
What does the term Solvent mean?
The ability to meet day-to-day expenditure and | repay debts.