Topic 1: Purpose Of Money Flashcards
Acceptable
To be widely accepted - (feature of money)
Barter
To exchange goods/services for other goods/services without using money.
Current account
Bank or building society accounts - people can store their money in form of electronic balances and withdraw to make payments
Denomination
Group of coins/notes that share the same value
Divisible
To be easily divided into amounts of different value - (feature of money)
Double coincidence of wants
Situations where two people have goods/services to trade and each wants what the other has.
Durable
To be strong enough to be reused in many transactions- (feature of money)
Face value
The value marked on a coin/note
Fiduciary Value
Value based on trust in the banking system.
Intrinsic value
Value an item has in itself
Legal tender
Coins/banknotes that’s accepted in payment of a debt
Inflation
Rise in prices - purchasing power of money falls
Homogeneous
Look and feel the same as other coins/banknotes of the same denomination.
Means of exchange
To allow people tp make payments - (function of money)
Money
anything accepted as payment
Payment mechanism
Transfering money from one account to another. E.g., debit card or cheque
Portable
To be small and light enough to carry - (feature of money)
Purchasing power
Quantity of goods/services that money can buy
Rate of exchange
How much one item is worth in terms of a different item.
Recognisable
To be easily identified as real money - (feature of money)
Representational value
Value an item represents rather than the value it has in itself
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 - (Feature of money)
Store of value
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 - (Feature of money)
