ECON - Money, Banking, and Firms, and Exam Strategy

Practice flashcards covering microeconomic principles including money, banking functions, household behavior, trade unions, and firm structures.

Money

Anything that is generally accepted as a medium of exchange for goods and services.

Barter

The direct exchange of goods and services without using money.

Double coincidence of wants

A problem in the barter system where both people involved in a trade must want exactly what the other person has.

Medium of exchange

A function of money that allows it to be used to buy and sell goods.

Store of value

A function of money that allows it to be saved and used in the future.

Unit of account

A function of money that provides a standard way to measure the value or prices of goods and services.

Standard of deferred payment

A function of money that allows it to be used to pay off debts in the future.

Central Bank

A financial institution that controls money supply, issues currency, acts as banker to the government, and serves as a lender of last resort to commercial banks.

Commercial Banks

Financial institutions that accept deposits, give loans, provide savings accounts, and offer credit cards and overdrafts to customers.

Credit Unions

Financial institutions owned by members, usually workers or communities, that offer savings and loans at lower rates.

Mutual Societies

Financial institutions owned by customers that focus primarily on savings and mortgages.

Investment Banks

Financial institutions that help businesses raise capital, deal with shares and bonds, and advise companies on investments.

Islamic Banks

Financial institutions that follow Islamic law by using profit-sharing instead of charging interest.

Households

Individuals or families that consume goods for satisfaction and provide factors of production.

Saving

The portion of household income that is not spent.

Borrowing

The act of taking loans from banks to be paid back in the future.

Trade Union

An organisation that protects the rights of workers by negotiating wages, improving conditions, and providing legal support.

Collective bargaining

The power of workers to negotiate as a group for better wages and safety conditions through a trade union.

Primary Sector

The sector of the economy involved in the extraction of raw materials, such as farming, fishing, and mining.

Secondary Sector

The sector of the economy involved in manufacturing goods, such as factories and construction.

Tertiary Sector

The sector of the economy involved in providing services, such as banking, education, and healthcare.

Merger

The process of two firms joining together into a single entity.

Horizontal Merger

A merger between two firms that operate in the same industry.

Forward Vertical Merger

A merger where a firm joins with its distributor.

Backward Vertical Merger

A merger where a firm joins with its supplier.

Conglomerate Merger

A merger between firms in different industries used for diversification and reduced risk.

Define / Identify

An exam command word requiring a short and precise answer with no explanation.

Explain

An exam command word requiring a definition plus one developed point.

Analyse

An exam command word requiring a chain of reasoning shown as $A \rightarrow B \rightarrow C$.

Discuss

An exam command word requiring two to three advantages, two to three disadvantages, and a final judgement.