Topic 1- Purpose of money Flashcards
What is Barter system?
This is two people exchanging goods/ services the want from each other to offer
What are “Double coincidence of wants”
when two individuals wants something that one an other own
What is intrinsic value?
Intrinsic value is the actual value of a certain material
What is Representative value?
This is the value of a material that’s represented as a specific value
What are the 8 functions of money? Hint*Acronym
PARSSHDD
Portable
Acceptable
Recognisable
Scarce but Sufficient
Stable
Homogenous
Divisible
Durable
What is meant by Portable?
Money should be able to be held for daily basis which is why there are smaller denominations for large amounts
What is meant by Acceptable?
Money is only accepted if then others are willing to accept as a form of payments
What is meant by Recognisable?
Money must have certain features to be recognised as a certain mount of just money in general
What is meant by Stable?
The value of the money should holds its value i the future however there is inflation
What is meant by Scarce but Sufficient?
Bank of England supplies enough money for the populations economy so that people’s transactions needs are met
What is meant by Homogenous?
Money should look and feel and look similar which is why money should be recognisable
What is meant be divisible?
Money should have smaller denominations to make large payments
What is meant by durable?
Notes and coins have to be used multiple times before being sent to the Bank of England to be revamped
