Money and Banking: notes

Money

• Barter: swapping goods for goods. It needs a double coincidence of wants.
• Functions of money: medium of exchange, unit of account, store of value and standard of deferred payment.
• Good money is: acceptable, durable, portable, divisible and scarce.

Banks

• Commercial banks: accept deposits, give loans and overdrafts, and offer transfers.
• Reserve Bank of Zimbabwe: the central bank. It issues notes and coins, acts as banker to the government and banks, and controls the money supply.
• Interest rate: the price of borrowing. Higher rates reduce borrowing.

Prices

• Inflation: a sustained rise in the general price level. It lowers what money can buy.
• Deflation: a sustained fall in the general price level.
• Stock exchange: a market for buying and selling shares.