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
A key feature of money - to be easily divided into amounts of different value
Double confidence 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 use in many transactions.
Face Value
The value marked on a coin or note, e.g. £5, £1, 50p
Acceptable
One of the key features of money - to be widely accepted
Homogenous
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 the purchasing power of money falls
Intrinsic value
The value an item has in itself, e.g gold has value because it is an expensive 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
A function of money - to allow people to make payments
Money
Anything widely accepted as a means of making payment
Payment mechanism
A means of transferring money from one account to the other, e.g a debit card, cheque.
Fiduciary value
Value based on trust in the banking system
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, e.g. One bag of flour is worth four nails, one £ is 1.5 euros, etc.
Recognisable
A key feature of money - 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 printed on it.
Scarce but sufficient
A key feature of money - to be available in sufficient quantities to meet people’s needs but not in such quantities that the value of money falls
Transaction
Buying or selling something
Unit of account
A function of money - to allow people to compare prices and to measure the value of money in a bank account, etc.
Portable
A key feature of money - to be small and light enough to carry around easily
