topic 1 Flashcards
barter
to exchange goods and services for other goods and services without using money
current account
bank or building society accounts where people can store their money in the form of electronic balances and withdraw it to make payments
denomination
a group of coins or notes that share the same face value
Divisible
to be easily divided into amounts of different value
double coincidence of wants
a situation in which two people have goods or services to trade and each wants what the other person can provide
acceptable
to be widely accepted
durable
to be strong enough to be reused in many transactions
face value
the value marked on a coin or note
Fiduciary value
value based on trust in the banking system
Homogeneous
to look and feel the same as other coins and notes of the same denomination
Inflation
a rise in prices, which means that the purchasing power of money falls
Intrinsic value
the value that an item has in itself, eg a solid gold coin has intrinsic value because it is made of a precious metal; a banknote does not have intrinsic value because it is a piece of paper
Legal tender
coins or banknotes that must be accepted if offered in payment of a debt
Means of exchange
to allow people to make payments
Money
anything widely accepted as a means of making payments
Payment mechanism
a means of transferring money from one account to another eg cheque
Portable
to be small and light enough to carry around easily
Purchasing power
the quantity of goods or services that money can buy
Rate of exchange
how much one item is worth in terms of a different item, eg one british pound is worth 1.5 euros
Recognisable
to be easily identified as genuine money
Representational value
the value that an item represents rather than the value it has in itself: a banknote is just a piece of paper but it represents the value that is printed on it
Scarce but sufficient
to be available in sufficient quantities to meet people’s needs but not in such quantities that the value of money falls
Store of value
an attribute of money that allows people to store money now and spend it later
Transaction
buying or selling something
Unit of account
to allow people to compare prices and to measure the value of money in a bank account
