Basic economic problem:choice and allocation of resources
Limited wants cannot supply unlimited human wants
Factors of production
Land
Capital
Labour
Enterprise
Natural Resources
Man made resources used to produce more goods and services
Human resources
Entrepreneurs
Individual as a producer, consumer and borrower
Problems with barter
Fixing a rate of exchange
Value of each and every good must be expressed in terms of every other good
Finding someone to swap with
There must be a double coincidence of wants
Trying to save
Functions of money
Money is a medium of exchange
Acceptable in exchange for all other goods
Eliminates problem of double coincidence
Money is a measure of value
Money is used to measure value of goods and services and in relative to each other
Money is a store of value
Will not lose value over time
Money is a means of deferred payment
Characteristics of money
Acceptability
Durability
Portability
Divisibility
Scarcity
Banks
Earning revenue
Charging interest on loans
Charging fees for the provision of other financial services
Withdrawals from atms
Exchanging and transferring foreign currencies
Buying and selling shares in public limited companies
Providing life, property and travel insurance
Issuing debit and credit cards
Storing valuables
Telephone and internet services