Money & Banking
What does ATM stand for?
Automated Teller Machine
What type of business is owned by one person?
Sole Trader
What are two characteristics of a successful entrepreneur?
Risk-taking, leadership, creativity, determination, or good communication skills
What is the principle of utmost good faith in insurance?
Both the insurer and insured must provide truthful and complete information
What is the difference between a need and a want?
A need is essential for survival while a want is something desired but not essential
What is the name of money paid into a bank account?
Deposit
Why might a private limited company be more attractive than a sole trader business?
Because shareholders have limited liability and the business can raise more capital
What are the 4 Ps of the marketing mix?
Product, Price, Place, and Promotion
What is an insurance excess?
The amount the insured person must pay before the insurer pays the claim
How can high inflation affect consumers?
It reduces purchasing power because prices rise faster than income
What document shows money taken from an account?
Bank Statement
What is meant by unlimited liability?
The owner is personally responsible for all business debts
Why might a business use penetration pricing when launching a new product?
To attract customers quickly by setting a low starting price
Why do insurance companies spread risk?
To reduce the impact of large losses by insuring many people
What is the opportunity cost of a decision?
The next best alternative that is given up
What is interest?
Money earned on savings or paid on loans
State one advantage and one disadvantage of a partnership.
Advantage: shared workload and skills. Disadvantage: shared profits or possible disagreements
Explain the difference between market research and market segmentation.
Market research gathers information about customers, while market segmentation divides customers into groups
Explain the difference between assurance and insurance.
Assurance covers events that will definitely happen, while insurance covers events that may happen
Why might unemployment increase during a recession?
Businesses may reduce production and lay off workers due to lower demand
Why might inflation reduce the value of savings?
Because money buys fewer goods and services over time
Why do companies issue shares?
To raise finance for the business
Why is promotion important in the marketing mix?
It informs customers about products and encourages them to buy
Why might a young driver pay a higher insurance premium?
Because insurers consider young drivers a higher risk
Explain how supply and demand affect prices.
High demand with low supply raises prices, while low demand with high supply lowers prices