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Economics > Money > Flashcards

Money Flashcards

1
Q

What is Money?

A

Money Refers to a commodity that is widely accepted as a Medium of Exchange

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2
Q

What are Functions of Money ?

A

Medium of Exchange
Store of Value
Unit of Account
Standard of Deferred Payment

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3
Q

What are Characteristics of Money ?

A 
Durability
Acceptability
Portability
Scarcity
Uniformity
Divisibility
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4
Q

What is Bartering ?

A

Bartering is the act of swapping Items in exchange for each other through bargaining and negotiation

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5
Q

What are Problems with Bartering ?

A

Requires Double Coincidence of Wants
Divisibility
Portability

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6
Q

What are Central Banks ?

A

The Monetary Authority that oversees and manages the countries Money Supply and Banking System

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7
Q

What are the Functions of Central Banks ?

A 
Issue Legal Tender
Bankers Bank
Governments Bank
Lender of the Last Resort
Set Monitoring Policy / Interest Rate
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8
Q

What is Liquidity ?

A

Liquidity is the ability to convert Assets into Cash

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9
Q

What are Commercial Banks ?

A

A Bank that Provides Financial Services to Customers

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10
Q

What are the Primary Functions of Commercial Banks ?

A

Accepting Deposits
Making Advances - Overdraft and Mortgage
Credit Creation - Increase Purchasing Power by Increasing the Money Supply in an Economy

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11
Q

What is Overdraft ?

A

Overdraft is the withdrawal of an amount that is Higher than in the Account. Only for Approved Customers/ Businesses

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12
Q

What is Mortgage ?

A

Mortgages are Long Term Loans of Appreciating Assets ( Land and Property )

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13
Q

What are Secondary Functions of Commercial Banks ?

A 
Collecting and Clearing Cheques
Offering Additional Financial Services
Safety Deposit Boxes
Offering Money Transfer
Offering Additional Credit Card/ International Banking Facilities
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14
Q

What is Disposable Income ?

A

Disposable Income is the Amount of Money a Person has available to spend after Taxes

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15
Q

What is Current Expenditure?

A

Current Expenditure is Money Spent on Items consumed within the Year

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16
Q

What is Capital Expenditure ?

A

Capital Expenditure is Money Spent on Assets lasting 12 Months or More

17
Q

What is Wealth

A

Assets - Liabilities

18
Q

What is the Positive Wealth Effect ?

A

Positive Wealth Effect is when The Value of Assets Increase

19
Q

What is Conspicuous Consumption?

A

When People Purchase Items to increase their Status or Image ( Luxury Goods )

20
Q

What is Negative Equity ?

A

Negative Equity is when the Value of Loan exceeds Market Value of the Property

21
Q

What effect will Higher Interest Rates Have on Borrowing, Saving and Spending ?

A

Higher Interest Rates will reduce Borrowing, and Spending and Increase Saving

22
Q

What effect will Lower Interest Rates Have on Borrowing, Saving and Spending ?

A

Lower Interest Rates will result in Increase in Borrowing and Spending, and Decrease in Saving

23
Q

What effect will Confidence Levels in the Economy Have on Borrowing, Saving and Spending ?

A

Higher Confidence Levels in the Economy will increase Borrowing and Spending,as People will Be buying and Firms will be Investing, while Savings will Decrease. If there is Low Confidence, Borrowing and Spending will reduce, as People will want to Save, so Savings will Increase

24
Q

What effect will Inflation have on Borrowing, Saving and Spending ?

A

Inflation will reduce Purchasing Power, reducing Spending and Saving, while Increasing Borrowing.
Decrease in Inflation will increase Purchasing Power, reducing Borrowing and Increasing Spending and Saving

25
Q

What effect will Age, and Household Size Have on Borrowing, Saving and Spending ?

A

Age will impact how much money and expense people have.
( Low Income - Cant Save )
( High Expenses - Cant Save )
Household Size will Impact how much will be bought ( More People - More Spending )

26
Q

What will Increase Borrowing ?

A

Credit Cards
Higher Wealth
Increase in Availability of Funds

Economics (4 decks)

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