Money and Banking Flashcards
1
Q
What are the forms of money?
A
- coins
- notes
- bank accounts
2
Q
What are the four functions of money?
A
- medium of exchange
- store of value
- unit of account
- standard of deferred payments
3
Q
What are the 7 characteristics of good money?
A
- generally acceptable
- limited in supply
- durable
- portable
- divisible
- homogenous
- recognisable
4
Q
Define ‘Central Bank’.
A
A government-owned bank which provides banking services to the government and commercial banks and operates monetary policy.
5
Q
What are the 9 roles of a central bank?
A
- acts as a banker to the government
- operates as a banker to the commercial banks
- acts as a lender of last resort to banks
- manages the national debt
- holds the country’s reserve of foreign currency and gold
- issues bank notes
- implements the government’s monetary policy
- controls the banking system
- represents the government in meetings with other central banks and international organisations
6
Q
Define ‘Commercial Banks’.
A
Banks which aim to make a profit by banking services to households and firms.
7
Q
What are the three main functions of commercial banks?
A
- to accept deposits
- to lend money
- to enable their customers to make payments.
