Topic 1 Flashcards
Acceptable
One of the key features of money – to be widely accepted.
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
A key feature of money – 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.
Durable
A key feature of money – to be strong enough to be reused in many transactions.
Face value
The value marked on a coin or note (eg 1p, 2p, 5p, £5, £10). Fiduciary value Value based on trust in the banking system.
Homogeneous
A key feature of money – 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 bag of rice has intrinsic value because it is a staple food; 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 or polymer.
Legal tender
Coins or banknotes that must be accepted if offered in payment of a debt.
Means of exchange
A function of money – 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 debit card, cheque.