Money Flashcards
What is money?
A current medium of exchange in the form of coins and banknotes
Before notes and coins, what was originally used as money in Australia?
Rum
What is currency?
A system of money in general use in a particular country
What is barter?
The trading of goods and services without the use of currency and money
Why is barter not used in Australia?
It has a very stable economy and we happily use our currency to purchase goods and services
What are exchange rates?
The value of one currency for the purpose of conversion to another
Why are exchange rates are needed?
So that currency can be converted easily between countries and tourists can travel between different countries
Define and explain money as a medium of exchange?
There are no double coincidence of wants, such as buying something for someone else
Define and explain money as a measure of value?
Makes transactions easy and fair, such as deciding what to buy out of two objects
Define and explain money as a store of value?
Allows people to save money, such as saving up a bit of money each week
Define and explain money as a standard of deferred payment?
When money is borrowed and loans are repaid in money, such as somebody paying back someone else in 2 weeks time, after receiving goods and services
What are the four characteristics of money?
Durability, divisibility, transportability, security
What are the four functions of money?
Money as a medium of exchange, money as a store of value, money as a measure of value and money as a standard of deferred payment
What does durability mean?
Money must be strong and not easily damaged
What does divisibility mean?
Money must have small and large amounts of currency
