Money, Banking and Credit Flashcards
(36 cards)
What is Money?
A Medium of Exchange in the form of coins and banknotes.
What was used for money before notes and coins?
Rum
What is Currency?
A system of money in general use in a particular country.
What is Bartering?
Bartering is the act of trading goods or services between 2 or more parties, without money
Why is Bartering not used anymore?
Bartering is not used anymore because countries have stable economies, which enable us to buy goods and services. We also have greater employment.
What is an exchange rate?
The value of one currency for the purpose of conversion to another.
Why are exchange rates needed?
Because there are numerous currencies in the world and they are worth different values, so we need to exchange them and have a set value so that people don’t get ripped off.
How do you convert Australian dollars into foreign currency?
Multiply by foreign currency exchange rate
How do you convert foreign currency into Australian dollars?
Divide by foreign currency
What are the functions of money?
Medium of Exchange, Store of Value, Standard of Deferred payment, Measure of Value.
Define and Give an example of Money as a Medium of Exchange.
It is as the name states, no double coincidences. E.g. Ricky buys a new cricket bat from Bob for $350.
Define and Give an example of Money as a Measure of Value.
It measures the value of all varieties goods. E.g. Joe goes to JB Hi Fi with $40. He is deciding whether to buy a pair of Headphones or 2 PS4 games.
Define and Give an example of Money as a Standard of Deferred Payment.
Allowing goods and services to be acquired now and paid for in the future. E.g. I buy a computer of someone and will pay them back in 2 weeks.
Define and Give an example of Money as a Store of Value.
Money can hold its value over time, in the form of banks. E.g. Saving $100 for the big Myer sale.
What are the Characteristics of Money?
Durability, Divisibility, Transportability and Security.
What is Durability as a Characteristic of Money?
The note can last for long periods of time and does not lose value through perishability and damage.
What is Divisibility as a Characteristic of Money?
Can be split into smaller portions or larger portions for larger or smaller purchases.
What is Transportability as a Characteristic of Money?
Easy to carry with you and is portable. Can carry hundreds of dollars in your pocket.
What is Security as a Characteristic of Money?
Cannot be easily duplicated or counterfeited.
What are Australian Banknotes made of?
Polymer Substrate
What is Income?
Is what you earn from your job, wage or salary.
What is Expenditure?
Spending money ‘Out Goings’
What is Credit?
The ability of a customer to obtain goods or services before payment, based on the trust that payment will be made in the future.
What are the advantages of Credit Card?
If you need to pay for something but you don’t have enough money, you can use credit. They allow you to have money on you without carrying around cash or having to locate an ATM, they are very convenient.
