Money

• What is bartering?

  Bartering is the process of exchanging goods and services directly.
• Why is bartering considered impractical in modern society?

  Bartering is impractical due to the size and complexity of transactions.
• What does money serve as in transactions?

  Money serves as a separate commodity used to buy or sell products.
• How does money act as a common denominator?

  Money acts as a common denominator for measuring the value of all products.
• What is the impact of inflation on money's buying power?

  Inflation can erode the buying power of money.
• What was the cost of common items in 1982?

  The cost was £6.92 in 1982.
• What was the cost of common items in 2012?

  The cost was £18.35 in 2012.
• How do financial institutions help maintain the real value of money?

  They invest in assets like gold.
• What is legal tender?

  Legal tender refers to physical money backed by the government.
• What type of money is most commonly in circulation today?

  Most money in circulation is electronic money.
• What role do financial institutions play in the economy?

  They help move electronic money around the economy through intermediation.
• What are financial intermediaries?

  Financial intermediaries facilitate transactions between surplus and deficit parties.
• Who are surplus parties in financial transactions?

  Surplus parties have more liquid funds.
• Who are deficit parties in financial transactions?

  Deficit parties need funds, such as loans.
• How do banks profit from lending?

  Banks profit by charging borrowers a higher interest rate than they pay to lenders.
• What services do banks provide?

  • Bank accounts
  • Loans
  • Mortgages
  • Savings accounts
  • Convenience
  • Protection from risk
• What is disintermediation?

  Disintermediation occurs when lenders and borrowers deal directly, bypassing intermediaries.
• What are examples of disintermediation?

  Examples include crowdfunding and peer-to-peer lending.
• What is a risk associated with disintermediation?

  The lender bears the full risk of borrower default.
• How do insurance companies manage risk?

  Insurance companies pool premiums and use them to pay claims.
• What is an example of risk management by insurance companies?

  Home insurance is an example of risk management.
• What are product sales intermediaries?

  • Independent Financial Advisers
  • Mortgage Brokers
  • Connect individuals with product providers
  • Help find mortgage products from banks and building societies
• Who connects individuals with product providers?

  Product sales intermediaries connect individuals with product providers.
• Bartering


  Bartering is the direct exchange of goods/services before money was introduced. Example: A farmer trading milk for apples. Impractical in modern society due to complex transactions.