unit 3 key topic 1 key terms Flashcards
money
flows in two directions - comes from various sources
function of money
the job money performs
store of value
allows us to keep it in the future as it holds its value
unit of account
allows us to place a monetary value on goods and services
means of exchange
allows us to trade - buy and sell goods and services through money
legal tender
legally recognised form of payment
factors influencing views on money
different people have different attitudes towards money- attitude may depend on individuals situation
personal attitudes
varied attitudes in risk and reward, and saving and borrowing
external influences
factors outside of control - state of the economy e.g. will impact wages, availability of jobs and price of goods and services
culture
tradition, religion and ethnic beliefs all impact view on money e.g. older Chinese people save and younger people are willing to spend more on credit
interest rates
when interest rates are low people will be more likely to borrow or spend on credit - when interest rates are high people are more likely to save
life events
life events (in or out of your control) will affect view on money e.g. travelling, illness, university, marriage
life stages
as you go through different stages in life, attitude to money will change
bankrupt
when an individual or organisation legally states its inability to repay debts
credit rating
a score given to individuals on how likely they are to repay debts based off previous actions
debt
money owed
solvent
ability to meet day to day expenditure and repay debts
income
money coming into a business
repossession
when a property/asset is taken from a business
expenditure
the money spent by a business or the amount of money a business needs to cover costs
risk
anything that could impact personal or business finances
adolescence
second stage in life stages where individuals want to be less reliant on parents and may find a part time job
pension
long term saving plan - individuals contribute throughout working life
mortgage
a long term loan to fund the purchase of assets e.g. a house, to be paid over a long period of time
insurance
an agreement with a third party to provide compensation against financial loss
inflation
a general increase in price and fall in value of money
borrowing
to receive money in exchange of a promise to re pay the amount to the lender
