Exam code: 0455 & 0987
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Define barter.
Barter is the direct exchange of goods and services without using money.
What is meant by the medium of exchange function of money?
The medium of exchange function of money means that money is used to facilitate the buying and selling of goods and services, without the need for barter.
Money acts as a of value, allowing it to be saved for future use.
Money acts as a store of value, allowing it to be saved for future use.
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Define barter.
Barter is the direct exchange of goods and services without using money.
What is meant by the medium of exchange function of money?
The medium of exchange function of money means that money is used to facilitate the buying and selling of goods and services, without the need for barter.
Money acts as a of value, allowing it to be saved for future use.
Money acts as a store of value, allowing it to be saved for future use.
Define unit of account.
A unit of account is a function of money that allows it to measure and compare the value of different goods and services.
A method of payment allows people to buy now and pay in the future.
A method of deferred payment allows people to buy now and pay in the future.
What does divisibility mean as a characteristic of money?
Divisibility means that money can be broken down into smaller units to allow for transactions of different sizes.
Good money must be so that it does not wear out easily and can be used over time.
Good money must be durable so that it does not wear out easily and can be used over time.
True or False?
Portability means that money is difficult to carry or conceal.
False.
Portability means that money is easy to carry or conceal.
Define near money.
Near money refers to assets that can be quickly and easily converted into cash, such as savings accounts.
What are the four main functions of money?
The four main functions of money are: medium of exchange, unit of account (measure of value), store of value, and method of deferred payment.
Define commercial bank.
A commercial bank is a financial institution that accepts deposits from individuals and businesses and provides loans and other financial services for profit.
What types of accounts can customers open at commercial banks?
Customers can open current, savings, and fixed deposit accounts at commercial banks, each offering different interest rates and features.
Commercial banks generate most of their profit by charging on loans.
Commercial banks generate most of their profit by charging interest on loans.
How do commercial banks facilitate payments for customers?
Commercial banks facilitate payments by offering debit and credit cards, cheque clearing, online banking, and domestic or international money transfers.
Define central bank.
A central bank is the main financial institution of a country, responsible for managing the nation’s currency, money supply, and interest rates.
What is monetary policy as implemented by a central bank?
Monetary policy is the adjustment of interest rates and the money supply by the central bank to influence total demand and meet the inflation target.
The central bank acts as the of last resort for commercial banks during liquidity issues.
The central bank acts as the lender of last resort for commercial banks during liquidity issues.
How does the central bank regulate the banking industry?
The central bank regulates the banking industry by setting rules and laws to control how financial institutions behave, protecting consumers from risks caused by asymmetric information.
Commercial banks help facilitate by providing trade finance and foreign currency, while central banks implement monetary policy to maintain economic .
Commercial banks help facilitate trade by providing trade finance and foreign currency, while central banks implement monetary policy to maintain economic stability.
True or False?
Both commercial and central banks play a role in supporting economic stability.
True.
Commercial banks channel savings into productive investments and support business growth, while central banks manage monetary policy and financial regulation to maintain economic stability.