Topic 1: Purpose Of Money

Question 1

Acceptable

Answer 1

To be widely accepted - (feature of money)

Question 2

Barter

Answer 2

To exchange goods/services for other goods/services without using money.

Question 3

Current account

Answer 3

Bank or building society accounts - people can store their money in form of electronic balances and withdraw to make payments

Question 4

Denomination

Answer 4

Group of coins/notes that share the same value

Question 5

Divisible

Answer 5

To be easily divided into amounts of different value - (feature of money)

Question 6

Double coincidence of wants

Answer 6

Situations where two people have goods/services to trade and each wants what the other has.

Question 7

Durable

Answer 7

To be strong enough to be reused in many transactions- (feature of money)

Question 8

Face value

Answer 8

The value marked on a coin/note

Question 9

Fiduciary Value

Answer 9

Value based on trust in the banking system.

Question 10

Intrinsic value

Answer 10

Value an item has in itself

Question 11

Legal tender

Answer 11

Coins/banknotes that’s accepted in payment of a debt

Question 12

Inflation

Answer 12

Rise in prices - purchasing power of money falls

Question 13

Homogeneous

Answer 13

Look and feel the same as other coins/banknotes of the same denomination.

Question 14

Means of exchange

Answer 14

To allow people tp make payments - (function of money)

Question 15

Money

Answer 15

anything accepted as payment

Question 16

Payment mechanism

Answer 16

Transfering money from one account to another. E.g., debit card or cheque

Question 17

Portable

Answer 17

To be small and light enough to carry - (feature of money)

Question 18

Purchasing power

Answer 18

Quantity of goods/services that money can buy

Question 19

Rate of exchange

Answer 19

How much one item is worth in terms of a different item.

Question 20

Recognisable

Answer 20

To be easily identified as real money - (feature of money)

Question 21

Representational value

Answer 21

Value an item represents rather than the value it has in itself

Question 22

Scarce but sufficient

Answer 22

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)

Question 23

Store of value

Answer 23

Allows people to store money now and spend it later.

Question 24

Transaction

Answer 24

Buying or selling something

Question 25

Unit of account

Answer 25

To allow people to compare prices and to measure the value of money in a bank account - (Feature of money)