Money and credit institutions

Question 1

What is money?

Answer 1

Money is a medium of exchange. Letters are widely accepted in transactions for goods and services or to settle debts.

Question 2

What are the functions of money?

Answer 2

1. A medium of exchange.
2. A measure of value.
3. A store of value.

Question 3

What are the characteristics of money?

Answer 3

1. Stability.
2. Acceptability.
3. Durability.
4. Portability.
5. Uniformity.

Question 4

What are the forms of money?

Answer 4

1. Currency in circulation. (Cash)
2. Bank deposit accounts.
3. Cryptocurrencies.

Question 5

Compare and contrast trade with money and trade with the barter system

Answer 5

1. When trading with the barter system, there must be a double coincidence of wants and money, eliminate that this simplifies and speeds up the process of trains, as finding such matters can be challenging.
2. Barter system has no store of value since goods and services are directly exchanged, but money provides a means to see the word for future needs or investments.
3. Barter system involves physical goods which can be difficult to transport. Whilst money offers, flexibility and portability.

Question 6

List the main roles of credit institutions

Answer 6

1. Accepting deposits.
2. Providing loans
3. My new transmission services

(4. Insurance
5. Investment and wealth management.)

Question 7

What is a national central bank?

Answer 7

A national central bank is an institution that is typically responsible for overseeing and managing the money supply within A country

Question 8

What are the main aims of the euro system and the central bank of Malta?

Answer 8

To maintain price stability

Question 9

Compare and contrast the main roles of credit institutions

Answer 9

COMPARE
Central banks and commercial banks both accept deposits, both provide loans and both transfer money between accounts

CONTRAST
Commercial banks are profit-making institutions whilst central banks are concerned with the implementation of monetary policies and controlling price stability.
Commercial banks, clients are individuals and businesses. Why is clients of central banks are the public sector and commercial banks, (gov)