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Money

QuestionAnswer
Give 5 reasons money had to be introduced Double coincidence of needs and wants. Uncertainty of exchange rate. Goods are not of uniform quality. Divisibility. Specialisation of labour is discouraged.
What is the gold standard? Acurrency where notes are fully backed and redeemable by an equivalent amount of gold
Why did Britain abandon the gold standard? WW1
What is the fiduciary issue? The proportion of a countries currency not backed by gold but by foreign currencies and securities
Define money Anything that is generally accepted by people in exchange for goods and services
Name four functions of money A medium of exchange. A measure of value. A standard for deferred payments. A store of wealth
Name 7 characteristics of currency Instantly recognisable as genuine. Generally acceptable. Portable. Reasonably durable. Divisible. Scare in relation to demand. Homogenous.
Name 6 forms of money Cash. Cheques. Electronic payments. ATM cards. Debit cards. Credit cards.
Define legal tender Money that must be accepted if offered as payment
What are the 5 functions of the ECB? Maintains price stability. Formulates EU monetary policy. Holds and manages the official reserve of the euro area countries. Financial stability and supervision. Sole right to issue euro currency.
Define monetary policy Actions by the ECB that influence money supply, interest rates and credit availability.
Name 5 ways the ECB implements monetary policy Monitoring growth of money relative to worth. Engaging in open market operations. Controlling interest rates. The use of standing facilities. Minimum reserve requirements.
Name 2 kinds of standing facilities Marginal lending facility. Deposit facility.
Name 2 ways the ECB impacts the Irish economy Monetary policy. Emergency liquidity assistence.
What is the central bank of Ireland? The body responsible for central banking and financial regulation
Name 9 functions of the CBI Issues legal tender. Government bank. Regulator of financial sector. Official external reserves. Maintains price stability, and financial stability. Provides Central bank reports. Protects consumers. Banker's bank.
How does the ICB act as a bankers bank? Clearinghouse department. Lender of last resort.
What is a commercial bank? Institutions that provide deposit and lending services to personal consumers and businesses.
Name two three kinds of banks Merchant/wholesale banks. Industrial banks.
What is a credit union? A group of people who save together and lend to each other. Each credit union is owned by its members.
What national company acts as an agent of the NTMA? An Post
What is the capital adequacy ratio? The percentage of a banks capital to its risk weighted assets
What are a banks two objectives? Profitability and liquidity
Name two earning assets Term loans and overdrafts. Government stock/ gilt securities.
Name three earning assets Exchequer bills/bills of exchange. Money at call. Cash deposits.
What percentage of assets are earning assets? 70%
What percentage of assets are liquid assets? 30%
What percentage of assets are term loans? 50%
What percentage of assets are government stock? 20%
What percentage of assets are exchequer bills? 12%
What percentage of assets are money at call? 8%
What percentage of assets are cash deposits? 10%
What are four restrictions on credit creation? Bank ratios. ECB guidelines. Supply of credit worthy customers. Economic recession.
Name three things affected by reduction in the availability of credit Motor industry. Inflation. Ireland's balance of payments.
What is the nominal interest rate? The interest rate unadjusted for inflation
What is the real rate of interest? The nominal interest rate less the rate of inflation
Name 8 effects of an increase in interest rate Borrowing discouraged. Savings encouraged. Increase in cost of national debt. The cost of capital increases. Investment discouraged. Economic growth dampened. Increase in DIRT revenue.
Name 8 effects of a decrease in interest rate Borrowing encouraged. Savings discouraged. Increased housing demand. National debt cost falls. Cost of capital falls. Investment encouraged. Economic growth encouraged. Decrease in DIRT revenue.
What is NAMA? A body created by the government of Ireland in late 2009, in response to the Irish financial crisis and the deflation of the Irish property bubble.
What is the purpose of NAMA? NAMA functions as a bad bank, acquiring property development loans from Irish banks in return for government purple debts bonds, ostensibly with a view to improving the availability of credit in the Irish economy.
Name 4 consequences of NAMA Banks prevented from insolvency. Artificial property price floor. Banks received fresh capital. If NAMA makes a short term loss money will be lost from the exchequer and hence public services.
Name two factors that caused Ireland's banking collapse The interbank market. The credit crunch.
Give six reasons banking regulation is needed Protect consumers. Proper lending policies. Banking system stability. Economic stability. Less need for gov. intervention. Less need for emergency funds.
Created by: JackEatonK98
 

 



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