MONEY_AND_FINANCE

Why do we need money?

To exchange for goods and services we cannot produce for ourselves due to lack of self-sufficiency and the need to trade with others.

What is barter?

Barter is the exchange of goods and services where payment for one product is made with another.

What is a problem associated with barter?

Finding someone to swap with (double coincidence of wants) and agreeing on values.

List the functions of money.

Medium of exchange, store of value, measure of value, means of deferred payment.

What characteristics define good money?

Good money must be acceptable, durable, portable, divisible, and scarce.

What is the difference between notes and coins and bank deposits?

Notes and coins are physical currency, while bank deposits are considered 'near money' that can be quickly converted to cash.

How do banks finance economic activity?

Banks lend money to individuals, firms, and government organizations; stocks can also be sold on the stock market for long-term financing.

What are banks in relation to customers?

Banks are financial intermediaries that connect savers with those seeking to borrow.

What do banks offer to encourage saving?

Banks offer interest to incentivize customers to save their money.

What is the interest rate?

The interest rate is the price of money, expressed as a percentage per unit of money.

What role does a central bank play?

The central bank maintains monetary stability and supervises banks, acting as a lender of last resort.

What is stock?

Stock refers to money raised by a joint stock company or government through the sale of shares.

What is another term for stock exchange?

A bourse is a business organization that enables buying and selling of stocks and shares.

Why is the stock market important?

It allows governments and companies to raise capital, thus facilitating economic activity.

What determines share prices?

Share prices are influenced by demand for shares, expected profits, and changes in dividend payouts.

What is a bullish market?

A market condition where stock prices are rising.

What is a bear market?

A market condition where stock prices are falling.