Questions and Answers
What is the definition of money?
Money is anything that is generally acceptable in exchange for goods and services.
Which of the following is not a requirement of money?
Barter is a more efficient method of trade in modern economies than using money.
False
What are the three primary functions of money?
Signup and view all the answers
Which of the following is considered a form of money?
Signup and view all the answers
Money can lose its value and purchasing power due to ______.
Signup and view all the answers
What is the role of a central bank in the monetary sector?
Signup and view all the answers
What type of card is used to transfer money electronically?
Signup and view all the answers
Digital financial services include only payment methods.
Signup and view all the answers
What is a significant risk associated with digital financial services?
Signup and view all the answers
Match the following cards with their descriptions:
Signup and view all the answers
Study Notes
The Monetary Sector
- Definition of Money: Anything generally accepted in exchange for goods and services.
- Barter Economy: Direct exchange of goods; requires a double coincidence of wants, making it time-consuming and inefficient for modern economies.
Requirements of Money
- General Acceptability: Must be desired and accepted by all as a medium of exchange.
- Durability: Should not wear out easily due to constant handling.
- Manageability: Needs to be portable relative to its value.
- Homogeneity and Divisibility: Various denominations should be uniform and divisible into smaller units.
- Recognisability: Easily identifiable and distinguishable from other materials.
- Value: Limited supply enhances scarcity and value; must maintain fairly constant value to avoid inflation losses.
Functions of Money
- Medium of Exchange: Widely accepted for goods and services transactions.
- Unit of Account: Used to state prices, facilitating comparison and total value calculations.
- Store of Value: Common means of holding wealth; other forms include gold, stocks, and real estate.
- Standard of Deferred Payment: Trust in stable value for credit transactions and deferred payments.
Types of Money
- Cash: Physical notes and coins used in transactions.
- Demand Deposits: Money in bank accounts that can be accessed via checks or electronic methods.
-
Payment Methods:
- Debit Cards: Transfer money electronically; enable ATM withdrawals.
- Credit Cards: Not money; represent credit available to buyers, requiring repayment later.
- Cheques: Instruments transferring money between accounts; not actual currency.
Digital Finance
- Definition: A broad range of financial services accessed and delivered digitally, including payments, credit, savings, remittances, and insurance.
- Advantages: No physical barriers, lower costs, faster transactions, and integration into formal financial systems.
- Risks: Potential for fraud, security, and confidentiality issues.
Young People and Digital Finance
- Vulnerability to Fraud: Young people, despite being digital natives, are more prone to online fraud risks such as identity theft and scams.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Description
Explore the essential concepts within the Monetary Sector, including the definition of money, its functions, and the roles of central and commercial banks. This quiz covers money creation processes, supply and demand dynamics, and instruments of monetary policy. Test your understanding of how money operates within the economy.
