Unit 1 : A1 Functions of Money

Front

Four primary functions of money

Back

1. Medium of exchange
2. Unit of account
3. Store of value
4. Legal tender

Front

Importance of medium of exchange

Back

Eliminates the need for bartering and allows goods and services to be exchanged easily, enabling trade and economic growth.

Front

Meaning of money as a unit of account

Back

Provides a standard measure for comparing the value of goods, services, and transactions.

Front

Effect of inflation on money as a store of value

Back

Reduces money’s purchasing power over time, diminishing its effectiveness as a store of value.

Front

Legal tender is a form of money that must be accepted by law to settle a public or private debt.

Back

Legal tender is a form of money that must be accepted by law to settle a public or private debt.

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Attitudes towards risk, saving, and spending determine choices such as saving for the future, taking on debt, or making investments.

Back

Attitudes towards risk, saving, and spending determine choices such as saving for the future, taking on debt, or making investments.

Front

Financial priorities shift with life stages, e.g., saving for education in youth, homeownership in midlife, and retirement planning later.

Back

Financial priorities shift with life stages, e.g., saving for education in youth, homeownership in midlife, and retirement planning later.

Front

Inflation erodes the purchasing power of money, influencing its overall value and utility.

Back

Inflation erodes the purchasing power of money, influencing its overall value and utility.

Front

Impact of interest rates on borrowing and saving

Back

Higher interest rates make borrowing more expensive and saving more attractive, while lower rates have the opposite effect.

Front

Definition of financial planning

Back

It is the process of setting financial goals, creating budgets, and managing resources to achieve long-term objectives.