Functions Of Money Flashcards
What are the 4 functions of money ?
-legal tender
-means of exchange
-unit of account
-store of value
Function of money - legal tender ?
Legal tender gives our currency a legally recognised method of payment meaning its widely accepted for transactions
Function of money - means of exchange ?
Means of exchange - this allows us to exchange , customers and businesses can buy or sell goods using money
Function of money - unit of account ?
Unit of account allows us to put a price on goods and services
Functions of money - store of value ?
Store of value is where money holds its value , therefore we can use it in the future
How will a low credit score impact an individual ?
- less likely to be able to take out a large loan
-higher interest on borrowing
-difficulties on some rental items
How will a high credit score impact an individual ?
-will be able to borrow large amounts of money
-lower interest rates on borrowing
Why do we plan our expenditure ?
-counter the effects on inflation
-control costs
-avoid getting into debt
-avoid legal action and/or repossession of goods or your home
-remain solvent
-maintain a good credit rating
-avoid bankruptcy
What are some of the benefits of planning ?
-a good credit score means you will be able to borrow money to fund a large purchase such as a car or a home
-money not spent on essentials can be saved and earn interest to generate an income
-savings cab be used to fund purchases or be available to pay for unexpected expenses
What are the risks of not planning expenditure ?
-getting into debts because you cannot pay bills
-having insufficient funds to pay loan repayments
-having legal action taken against you for non payment of loans or losing goods that you are unable to pay for
-a poor credit score which will affect your ability to borrow money
-not being able to save for the future
