25. What does the purchasing power of money mean?

To the economists the value of money or its purchasing power means the amount of goods and services people can buy with their money.

26. What is inflation?

Inflation: An increase in the general level of prices; a period of rising prices during which the purchasing power of a monetary unit is falling.

27. What is deflation?

Deflation: A decrease in the general level of prices; a period during which the purchasing power of a monetary unit is rising.

28. What types of money do economists differentiate nowadays?

Nowadays economists differentiate among three different types of money: commodity money, fiat money, and bank money.

29. What is commodity money?

Commodity money: a specific commodity used as a form of money Commodity money is a good whose value serves as the value of money.

30. What is fiat money?

Fiat money is an inconvertible paper money made legal tender by a government decree. It is a good, the value of which is less than the value it represents as money.

31. What is bank money?

Bank money is checks, drafts, and bank credits other than currency that are the equivalent of money.

32. What is the difference between commodity money and fiat money?

Bank money differs from commodity and fiat money in two ways. Firstly it is non-physical, as its existence is only reflected in the account ledgers* of banks and other financial institutions, and secondly, there is some element of risk that the claim will not be fulfilled if the financial institution becomes insolvent.

MONEY MANAGEMENT

1.What should a person do to avoid financial troubles or make them a thing of the past?

People love to dream about having it but hate to talk about how to get it. It takes time, discipline, persistence, and diligence to make the dream of having money come true and the financial difficulties become a thing of the past.

2. What spending options do individuals have today?

At the present time managing money is very complicated. Not only do we have more spending options than in the past, we now have more choices of how to pay – by cash, check, credit card, debit card, pre-authorized* withdrawals and through the Internet.

3.Why do people obtain credit?

Part of personal money management is using credit. In order to take bachelor's or master's degree, buy a house, a car, an appliance, take a holiday or even invest, many of us must borrow.

4. What is the main advantage of credit?

The advantage of credit is that we can enjoy new purchases today while spreading repayment into the future.

5.What should people bear in view before buying on credit?

In today’s financial world, there are many types of credit available to you. Keep in mind that each one has its own benefits and drawbacks. The following list is an overview of what is available.

6.What is a credit card?

The different cards offer a variety of options. Some financial institutions offer all-purpose* credit cards like VISA, MasterCard and American Express. They can be used to extend payment for the purchase of goods and services over time. If you make full payment each month, there are no interest charges. However, if you take a cash advance on your credit card, you are charged interest from the moment you make a withdrawal until the money is paid back

. 7.What do credit cards provide?

They can be used to extend payment for the purchase of goods and services over time. If you make full payment each month, there are no interest charges