Chapter 7 Money is anything which people are willing to accept in exchange for goods and services. Barter involved exchanging or swapping goods or services which people already have for something else they need. For example a pig in exchange for a pair of shoes. This system was very complicated. Not only did you need to find someone who had what you needed, but he/she had to be willing to accept whatever you had to offer. To overcome this problem money was introduced. For example how many pairs of shoes for one pig?
Legal tender is the name given to the notes and coins which shopkeepers are obliged by law to accept in payment for goods and services. Currency is legal tender but cheeses and cards are not. Money today comes in three forms: * Notes and Coins – known as currency (Euro). * Cheeses – to write cheeses you need to have a current account in the bank. * Cards – credit cards, charge cards and ATM card. These are known as plastic money. Ireland along with eleven other countries formed an Economic and Monetary Union (MME) which created a single currency, the Euro, to be used as currency in all twelve countries.
However each country has its own special symbol on the back of their coins, and the front of each coin is identical in all the countries. The Euro zone The twelve countries that Joined the single currency are Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Portugal and Spain. It is expected that sometime in the future other members will Join. Advantages of a single currency. The main advantages to Ireland of having a single European currency are: * Firms that import or export goods between Euro zone countries can trade without exchange ate changes.
The firms know how much goods cost and will receive in payment. * No more commission for changing currencies. * Ireland’s interest rate should stay relatively low. * Ireland’s inflation rates should stay relatively low. Questions at the end of the chapter answered. 1 (a) Explain what’s meant by bartering. Bartering is the exchange of one good or service for another. For example, exchanging a pig for a pair of shoes. (b) List three reasons why bartering was an unsuitable means of buying and selling goods. 1.
You have to find someone willing o take your goods in exchange for what you’re looking for. 2. Both items had to be the same value. 3. The goods being exchange had to be carried around and this could be inconvenient particularly if the goods were heavy or bulky. 2 (a) Explain what is meant by the term money? Pestle and Porters Five Forces in the Freight Industry By crawling Money is anything which people are willing to accept in exchange tort goods and services. (b) List four reasons why our system of money is suitable for the buying and selling goods and services. It is light weight, small and easy to carry around. 2) It is in scarce supply and so it will hold its value. 3) It is easy to break down into small units. 4) Easy to recognize as the notes and coins of each amount are identical in look and value. 3 (a) what do the letters MME stand for? European Monetary Union. (b) What is meant by the term Single Economic Currency? It means that all twelve member countries have the same currency. It helps them to trade easily between countries. 4 (a) what is the Single European Currency Called?
The Euro (b) List two possible advantages of the Single European Currency to Ireland? * Trade between member states is easy as no commission is charged. * If trade happens within the single member currency then the trading company will know how much he will get when he exchanges his goods. (c) Name all the countries that have the Euro as their national currency? The twelve countries that Joined the single currency are Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Portugal and Spain.
