Money and banking Flashcards
What is the main form of money in most countries?
The main form of money in most countries is coins, bank notes, and bank accounts.
What are the 4 primary functions of money?
The primary functions of money are:
1. Act as a medium of exchange
2. Act as a measure of value
3. Act as a store of value
4. Act as a method of deferred payments.
What are the characteristics of money?
- Divisibility
2.Accaptability
3.Durability
4.Scarcity
5.Uniformity - Portability
What are the 3 main functions of a commercial bank?
The 3 main functions of a commercial bank are:
1.Lend money
2. Allow customers to make payments
3. Accept deposits.
What is a current or demand account?
A current or demand account is an account from which money can be frequently deposited and withdrew.
What is a deposit or time account?
A deposit account is an account in which interest is paid for the money you have deposited in your account and money can be deposited whenever you want but notice has to be given before withdrawing the money.
What is an overdraft?
An overdraft is a way of borrowing from the bank for a short time. An overdraft occurs when you use more money than what you have in your account. When you overfraft your account, you get really high interest rates and a short time to pay it back. (High overdrafts are declined)
What is a loan?
A loan is a way of borrowing from the bank for the long term with low interest rates (compared to overdrafts) but when taking a loan, you have to give collateral to the bank (collateral is a form of security for the bank to ensure that it doesn’t go into any debts). The bank will sell the collateral if the debts haven’t been paid in time.
What is liquidity?
Liquidity is when a bank can turn assets into cash without any loss.
What is Islamic finance?
Islamic finance is when interest is not charged on loans because it is considered a sin, so a share of their profits is taken.
