PBO LESSON 1 Flashcards
(22 cards)
What early man’s needs was provided by its natural resources
Direct Appropriation Stage
Goods and services directly exchange for other goods and services
Barter ended man’s self-sufficiency and ushered in economic interdependence among men
Barter/Direct Stage
Some goods because of its usefulness, beauty, scarcity and rarity commands a wide acceptance as medium of exchange.
Use of Commodity as Money
Money whose monetary value is more than its material or commodity value
Credit Money
Stages in Exchange Development
(D B U C)
- Direct Appropriation Stage
What early man’s needs was provided by its natural resources
- Barter/Direct Stage
Goods and services directly exchange for other goods and services
Barter ended man’s self-sufficiency and ushered in economic interdependence among men
- Use of Commodity as Money
Some goods because of its usefulness, beauty, scarcity and rarity commands a wide acceptance as medium of exchange.
- Credit Money
Money whose monetary value is more than its material or commodity value
Difficulties of Barter
(P N L I)
- Product do not have the same value
- No double coincidence of wants
- Lack of store value
- It is cumbersome, inconvenient and indivisible
Types of Money (N M I)
- Non-Metallic (rice, corn, wheat, salt, tea, cattle)
- Metallic Money (gold, silver, copper.
- Intrinsic value or material value is equal it’s monetary value
comes from the Greek Word “Moneta”
- Any item or medium of exchange that symbolizes perceived value.
Anything which is used as a medium of exchange and is widely accepted for the payment of goods and services, debts and obligations within a given territory without reference to the credit standing of the person who offers it
Money
Buying power to how much you can buy with your money. As prices rise, your money can buy less. As prices drop, your money can buy more.
Purchasing Power
It is a mandatory law that makes money accepted in payment for all kinds of services.
Legal Tender Power.
Security Features of Philippine (Banknote)
A. Look (S S S V M B)
- Sampaguita Clear Window
- Serial Numbers
- Shadow Thread
- Vertical Clear Window
- Metallic Features
- Blue Iridescent Figure
B. Feel (P S T E F)
- Polymer Substrate
- Sampaguita Clear Window
- Tactile Dots
- Embossed Prints
- Flying Eagle
C. Tilt (E M B)
- Enhanced Value Panel
- Metallic Features
- Blue Iridescent Figure
Functions of Money
(S M S S)
- As a Standard Unit of Value
Money serves as a measuring device in which value of goods and services can be expressed
- As a Medium of Exchange
Money serves as a common medium or tool of exchange
- As a Store of Value
Money has the quality to be kept or stored for future use
- As a Standard of Deferred Payment
The money that we use as a medium of exchange is the same money we can use to pay for our debts and obligations
Characteristics of Good Money
(P S G C D, H D U M)
- Portability
Money is made light, to be easily carried from one place to another
- Stability
Value must not change every now and then and not be susceptible to fluctuations, devaluation, inflation, etc.
- General Acceptance
Accepted by anyone in exchange for goods and services
- Cognizability
Design should not only be aesthetically beautiful but also difficult to counterfeit
- Durability
Money must withstand longer period of time against wear and tear
- Homogeneity
Material used must be uniform in composition throughout
- Divisibility
Divisible into small parts and likewise possible to recombine these small parts into bigger
- Uniformity
Money must conform to certain standard to avoid confusion (size, shape, and color)
- Malleability
Money can be melted and beaten into a desired shape to conform to the specification of the government
Forms of Money (C C C)
- Commodity Money
Money that is made up of precious metal or another valuable commodity:
- Non-Metallic Money
- Metallic Money (Gold/Silver)
- Currency (Bills and Coins)
Domestic currency can only be used in its country of origin. If it is used in another country, it needs to be exchanged with the currency of that country.
- Check
Generally used by businesses and persons in conducting business, as well as personal transactions
It is a written order to a bank (drawee), by the person, who issues the check (maker or drawer) to pay someone whose name is written on the face of the check (payee) a certain amount of money on demand.
A term broadly describing the study and system of creating, circulating, and managing money, investments, and other financial instruments.
Finance
Institutions that act as a middleman between two parties to facilitate a financial transaction.
They reallocate uninvested capital to productive sectors of the economy through debts and equity (i.e. commercial banks, investment banks, mutual funds, and pension funds).
Financial Intermediaries
Financial Intermediaries BENEFITS | FUNCTIONS
(A P I S E)
- Asset Storage
Commercial banks provide safe storage and records of withdrawals, deposits, and direct payments they have authorized
- Providing Loans
They channel funds from depositors with surplus cash to individuals who are looking to borrow money
- Investment
Savers can make large investments by pooling funds together by gaining access to a broader pool of investors.
- Spreading Risk
Commercial banks provide safe storage and records of withdrawals, deposits, and direct payments they have authorized
- Economies of scope & scale
Intermediaries help create efficient markets and lower the cost of doing business. offer the benefit of pooling risk, reducing cost, and providing economies of scale, among others.
Monetary charge for the privilege of borrowing money expressed as a percentage rate over a period of time. The amount of interest a person must pay is often tied to their creditworthiness, the length of the loan, or the nature of the loan.
Interest
Amount a lender charges a borrower and is a percentage of the principal-the amount loaned.
Interest Rate
Two common types of interest:
simple interest (based on the principal amount) and
compound interest (based on principal and previously-earned interest)
is an interest charge that borrowers pay lenders for a loan. It is calculated using the principal only and does not include compounding interest.
Simple Interest
or “interest on interest” is the interest on savings calculated on both the initial principal and the accumulated interest from previous periods.
Compound Interest
