3.1 Money and Banking

Question 1

What is money?

Answer 1

A medium of exchange of goods and services

Question 2

What are 3 characteristics of money?

Answer 2

• Durable
  -Portable
• Generally Accepted

Question 3

Explain the characteristic of durable for money

Answer 3

Durable means it can last some time, therefore it can be saved

Question 4

Explain the characteristic of portable for money

Answer 4

Portable means money can be easily carried around

Question 5

Explain the characteristic of generally accepted for money

Answer 5

Generally accepted means people will be willing to accept as a means of payment

Question 6

What are 3 functions of money?

Answer 6

• Medium of exchange
  -Measure of Value
• Store of Value

Question 7

Explain the function of medium of exchange of money

Answer 7

A medium of exchange to buy goods and services

Question 8

Explain the function of measure of value of money

Answer 8

A measure of value to measure how much a product is worth

Question 9

Explain the function of store of value of money

Answer 9

Store of value of money allows people to save money as it doesn’t lose its value

Question 10

What are banks?

Answer 10

financial institutions that act as an intermediary between borrowers and savers

Question 11

Define a commercial bank

Answer 11

those banks that have many retail branches located in most cities and towns

Question 12

Define a central bank

Answer 12

bank that governs all other commercial banks in a country

Question 13

What are 3 functions of a commercial bank?

Answer 13

• Accept deposits as savings
• Give loans
• Give financial advice

Question 14

What are 3 functions of a central bank?

Answer 14

• Issues notes/coins
• Operates the monetary policy
• Acts as lender of last resort