Money Flashcards
Money was derived from the Latin word…
moneta
It makes something valuable, and over-abundance makes it worthless. It means rare or hard to find. This is based on the basic economic law of supply and demand.
Scarcity
is the lawful token used in our society to pay goods, services, and debt.
Money
It is another feature that enables one to suit the medium of exchange to the kind of transaction, big or small. Small units apply to small transactions and big units apply to big transactions.
Divisibility
An ease in handling or carrying makes one thing desirable as a medium of exchange.
Portability
It means long lasting. Metal is almost indestructible that is why it became a medium of exchange for a long time.
Durability
What are the two basic functions of money
To facilitate the exchange of goods and services
To lessen the time and effort required to carry on trade
5 Functions of Money?
Medium of Exchange Standard of Value Store of Value Means of Deferred Payment Conveyance
The use of money to facilitate the transfer of goods and services and settle obligations has made money the basic medium of exchange.
Medium of Exchange
Money is our measuring stick to measure the value or worth of something.
Standard of Value
The excess of income over expenses is usually saved. Our savings, usually in the form of money, is stored either in the bank or at home for future use – that is the idea of store of value.
Store of Value
As legal tender, money is acceptable in payment of debts or liabilities. If payment is to be made in the future, money becomes a means of deferred payment.
Means of Deferred Payment
It means postponed or held for future use. So long as prices remain stable, the amount owed is what is paid, and the creditor is able to buy the same amount of goods or services.
Deferred
It refers to the means of transport or transfer.
Conveyance
The government issued this to represent certain quantities of gold or silver kept by the government to cover what has been issued, representative paper money.
Paper Money
