Explain the following terms: (i) Barter; (ii) Money; (iii) Price Inflation - Leaving Cert Economics - Question 6 - 2014

Money is any item or medium that is accepted as payment for goods and services. It serves as a unit of account, a medium of exchange, and a store of value. Money can take various forms, such as physical currency, bank deposits, or even digital currencies, facilitating transactions in the economy.

Price inflation is defined as an increase in the general price level of goods and services in an economy over a period of time. It indicates a decrease in the purchasing power of money, leading consumers to pay more for the same quantity of goods and services. Inflation can be caused by demand-pull factors, cost-push factors, or built-in inflation.

The initials ECB represent the European Central Bank. It is the central bank for the eurozone, responsible for monetary policy and ensuring price stability within the member states.

The term 'Interest rate' refers to the price of borrowing money or the return on savings. It is typically expressed as a percentage of the amount borrowed or saved. A lower interest rate reduces the cost of borrowing, encouraging spending and investment.

1. Borrowing Encouraged: Lower interest rates decrease the cost of mortgage repayments, allowing consumers to have more disposable income. This encourages more borrowing and spending, thus boosting economic activity.

2. Savings Discouraged: With lower returns on savings, individuals may find it less attractive to save. Instead, they are likely to spend more, contributing to economic growth.

3. Cost of Servicing the National Debt Reduced: Lower interest rates reduce the costs associated with servicing national debt, allowing the government to allocate more resources towards public services and investments.

1. Savings Facilities: Commercial banks provide security for depositors' funds and pay interest on their savings, helping individuals save for future expenses.

2. Lending: Banks offer a range of loans, overdrafts, and mortgages, enabling individuals and businesses to access necessary funds for various purposes.

1. Loss of jobs: The closure of banks may lead to job losses, impacting local economies. Employees may need to relocate, which can disrupt livelihoods and community stability.

2. Reduced economic activity in rural areas: Fewer banks mean less access to financial services, particularly in rural regions, which may decrease local economic activities and opportunities for development.

High Bad Debts: Some credit unions have experienced increased debts due to borrowers failing to repay their loans, resulting in financial strains and potential insolvencies.