1.1 // What is Money? Flashcards
Money
A medium of exchange that facilitates trade and can be used to purchase goods and services.
What is considered as the first form of money?
Coins of fixed weight and value.
Who minted the first form of money?
Lydians from modern day Turkey.
When was the first form of money minted?
3,000 years ago.
What items make up commodity money?
Items that have value in themselves as well as value in their use as money.
ex: precious coins
What items make up representative money?
Items that have no value within themselves, but can be exchanged for an item of value.
ex: paper money
With paper currency, (?) money evolved into (?) money.
commodity; representative
What is the gold standard?
A system in which currency is defined in terms of gold. Countries set a price for gold and buy and sell gold at that price.
When was the gold standard used and abandoned?
Used toward the end of the 19th century, but abandoned during the Great Depression.
What system does the U.S. use today in place of the gold standard?
A floating exchange rate.
Introduced by Nixon in 1971.
What is a floating exchange rate?
A system where currencies rise and fall according to supply and demand.
What are coins and paper money backed by today?
The faith and credit of the U.S government.
What does the United States Mint do?
They mint coins.
What does the United States Bureau of Engraving and Printing do?
They make bills.
What does the United States Federal Reserve do?
They control the amount of currency in the country based on inflation.
They destroy old, worn out bills.
