Functions and Role of Money

Question 1

Unit of Account

Answer 1

Allows a monetary value to be placed on goods & services

Question 2

Means of Exchange

Answer 2

Enables businesses to trade with other businesses and customers

Question 3

Store of Value

Answer 3

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

Question 4

Legal Tender

Answer 4

Method of payment - allows us to pay later

Question 5

Personal Attitudes

Answer 5

Depends on family’s attitudes or your own attitudes.

Question 6

Life Stages

Answer 6

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

Question 7

Culture

Answer 7

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

Question 8

Life Events

Answer 8

• 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.

Question 9

External Influences

Answer 9

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

Question 10

Interest Rates

Answer 10

The cost of borrowing money or the reward for saving money

Question 11

How does interest rates impact the role of money?

Answer 11

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.

Question 12

Which life stage does this refer to?

Financial Needs/Implications?

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

Answer 12

Childhood - Financial Needs

Question 13

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

Answer 13

Childhood - Implications

Question 14

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

Answer 14

Adolescence - Financial Needs

Question 15

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

Answer 15

Adolescence - Implications

Question 16

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

Answer 16

Young adult - Financial Needs

Question 17

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

Answer 17

Young adult - Implications

Question 18

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

Answer 18

Middle age - Financial Needs

Question 19

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

Answer 19

Middle age - Implications

Question 20

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

Answer 20

Old age - Financial Needs

Question 21

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

Answer 21

Old age - Implications

Question 22

State two IMPLICATIONS of a YOUNG ADULT

Answer 22

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

Question 23

State two FINANCIAL NEEDS of MIDDLE AGE

Answer 23

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

Question 24

What is Debt?

Answer 24

Money owed

Question 25

What is a Credit rating?

Answer 25

A score given to individuals on how likely they are to repay debts based upon their previous actions.

Question 26

What does the term Bankrupt mean?

Answer 26

When an individual or organisation legally states its inability to repay debts.

Question 27

What does the term Solvent mean?

Answer 27

The ability to meet day-to-day expenditure and

repay debts.