topic 1

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 can 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

to be easily divided into amounts of different value

Question 5

double coincidence of wants

Answer 5

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

Question 6

acceptable

Answer 6

to be widely accepted

Question 7

durable

Answer 7

to be strong enough to be reused in many transactions

Question 8

face value

Answer 8

the value marked on a coin or note

Question 9

Fiduciary value

Answer 9

value based on trust in the banking system

Question 10

Homogeneous

Answer 10

to look and feel the same as other coins and notes of the same denomination

Question 11

Inflation

Answer 11

a rise in prices, which means that the purchasing power of money falls

Question 12

Intrinsic value

Answer 12

the value that an item has in itself, eg a solid gold coin has intrinsic value because it is made of a precious metal; a banknote does not have intrinsic value because it is a piece of paper

Question 13

Legal tender

Answer 13

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

Question 14

Means of exchange

Answer 14

to allow people to make payments

Question 15

Money

Answer 15

anything widely accepted as a means of making payments

Question 16

Payment mechanism

Answer 16

a means of transferring money from one account to another eg cheque

Question 17

Portable

Answer 17

to be small and light enough to carry around easily

Question 18

Purchasing power

Answer 18

the quantity of goods or services that money can buy

Question 19

Rate of exchange

Answer 19

how much one item is worth in terms of a different item, eg one british pound is worth 1.5 euros

Question 20

Recognisable

Answer 20

to be easily identified as genuine money

Question 21

Representational value

Answer 21

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

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

Question 23

Store of value

Answer 23

an attribute of money that 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