Money and Banking Flashcards

1
Q

What are the forms of money?

A
  • coins
  • notes
  • bank accounts
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2
Q

What are the four functions of money?

A
  • medium of exchange
  • store of value
  • unit of account
  • standard of deferred payments
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3
Q

What are the 7 characteristics of good money?

A
  • generally acceptable
  • limited in supply
  • durable
  • portable
  • divisible
  • homogenous
  • recognisable
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4
Q

Define ‘Central Bank’.

A

A government-owned bank which provides banking services to the government and commercial banks and operates monetary policy.

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5
Q

What are the 9 roles of a central bank?

A
  • acts as a banker to the government
  • operates as a banker to the commercial banks
  • acts as a lender of last resort to banks
  • manages the national debt
  • holds the country’s reserve of foreign currency and gold
  • issues bank notes
  • implements the government’s monetary policy
  • controls the banking system
  • represents the government in meetings with other central banks and international organisations
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6
Q

Define ‘Commercial Banks’.

A

Banks which aim to make a profit by banking services to households and firms.

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7
Q

What are the three main functions of commercial banks?

A
  • to accept deposits
  • to lend money
  • to enable their customers to make payments.
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