Week 1 : Purpose Of Money

Question 1

Barter

Answer 1

To exchange goods and services for other goods and services without using money

Question 2

Current account

Answer 2

Bank or building society accounts where people store their money in the form of electronic balances and withdraw it to make payments

Question 3

Denomination

Answer 3

A group of coins or notes that share the same face value

Question 4

Divisible

Answer 4

A key feature of money - to be easily divided into amounts of different value

Question 5

Double coincidence of wants

Answer 5

A situation in which 2 people have goods or services to trade and each wants what the other person can provide

Question 6

Durable

Answer 6

A key feature of money- to be strong enough to be reused in many transactions

Question 7

Face value

Answer 7

The value marked on a coin or note (eg, 1p, 5p, £20)

Question 8

Fiduciary value

Answer 8

Value based on trust in the banking system

Question 9

Homogeneous

Answer 9

A key feature of money - to look and feel the same as other coins and notes of the same denomination

Question 10

Inflation

Answer 10

A rise in prices, which means that the purchasing power falls

Question 11

Intrinsic value

Answer 11

The value that an item has itself eg, a bag of rice has intrinsic value because it is a staple food. A solid gold coin has intrinsic value because it is made of a precious metal. A bank note does not have intrinsic value because it is a piece of paper

Question 12

Legal tender

Answer 12

Coins or banknotes that must be accepted if offered in payment of a debt

Question 13

Means of exchange

Answer 13

A function of money - to allow people to make payments

Question 14

Money

Answer 14

Anything widely accepted as a means of making payments

Question 15

Payment mechanism

Answer 15

A means of transferring money from 1 account to another eg, a debit card, cheque

Question 16

Portable

Answer 16

A key feature of money - to be small and light enough to carry around easily

Question 17

Purchasing power

Answer 17

The quantity of goods or services that money can buy

Question 18

Rate of exchange

Answer 18

How much 1 item is worth in terms of a different item eg, 1 bag of flour is worth 4 nails, 1 British pound is worth 1.5 euros

Question 19

Recognisable

Answer 19

A key feature of money - to be easily identified as genuine money

Question 20

Representational value

Answer 20

The value that an item represents rather than the value it has in itself: a banknote is just a price of paper but it represents the value that is printed on it

Question 21

Scarce but sufficient

Answer 21

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

Question 22

Store of value

Answer 22

An attribute of new that allows people to store money now and spend it later

Question 23

Transaction

Answer 23

Buying or selling something

Question 24

Unit of account

Answer 24

Function of money - to allow people to compare prices and to measure the value of money in a bank account

Question 25

Acceptable

Answer 25

One of the key features of money - to be widely accepted