Economics PART 2

Question 1

Part 1: Money

How many different types of money are there?

Answer 1

2!

Question 2

What is the first type of money?

Answer 2

Commodity

Question 3

What is commodity money??

Answer 3

Objects that are useful one its own

Question 4

What are 2 examples of commodity money??

Answer 4

1- Gold, gold can be made into useful or beautiful objects.

2- markers during a classroom shortage.

Question 5

What is one more example of commodity money that can do a few things?

Answer 5

A cow, the cow can give milk, be used for food, or leather..

Question 6

What is the second type of money??

Answer 6

Fiat $.

Question 7

What is fiat money?

Answer 7

Fiat money is money that has no money on its own ; no value

Question 8

If fiat money has no money, why is it accepted?

Answer 8

it’s accepted because the government issues it or people are willing to accept it

Question 9

what are examples of fiat money?

Answer 9

Monopoly money,bit coins, paper bills, checks,

Question 10

What are the qualities of effective money?

Answer 10

• it is portable
• stable in value (meaning its the worth the same, and wont quickly change)
• it is a uniform meaning sizes of cash stay the same
• can be used anywhere
• divisible (can be broken into smaller amounts)
• scarce (rare and valuable- ex:gold

Question 11

What is valuable and what is an example?

Answer 11

Valuable: worth a lot of money, rare
Ex: gold

Question 12

What does it mean to divide effective money?

Answer 12

It is like when you go to0 the bank and turn a 50 dollar bill too 10s.

Question 13

Part 2: History of Money

What is bartering?

Answer 13

Trading WITHOUT money.

Ex: trading a cow, for a cow

Question 14

Why is livestock traded?

Answer 14

It is traded because they provided food, transportation, and clothing materials.

Question 15

True or false: metal coins have value today..

Answer 15

They are collectors items and are worth money if you sell them but no they did have value, because they were the currency from 2500 BCE-

Question 16

How did they identify if metal coins were real and not faux?

Answer 16

Real metal coins had images of Gods stamped on them, metal coins without those were faux!

Question 17

What was a good thing about paper currency, and when was it created?

Answer 17

A good thing about paper currency, which was used in 618 BCE was that it was lightweight and easy to carry!

Question 18

The gold standard had to be _____ __ ___ ___ ____ ________?….

Answer 18

Backed by a scarce and valuable thing to make it have value

Question 19

true or false: Having three types of metal to back up makes it more stable

Answer 19

False!

You can have one to make it make stable.

Question 20

What was adopted with the rule: having one type of metal to back up makes it more stable?

Answer 20

Gold was adopted

Question 21

What where the different times gold was adopted?

Answer 21

By the U.S in 1900

- by Great Britain in 1819

Question 22

What did the good standard act almost lead too?

Answer 22

Money that was almost scarce.

Question 23

Could you exchange gold for fiat currency?

Answer 23

No, that was decided by President Nixon in 1971. No because gold was valuable

Question 24

When was fiat currency taken off the u.s currency ?

Answer 24

In 1978

Question 25

Part 3

What is a nickname for the federal reserve?

Answer 25

The fed.

Question 26

What does the federal reserve regulate?

Answer 26

It regulates banks and helps control the supply of $ in the U.S.

Question 27

How many regional banks hold in from commercial banks?

Answer 27

There are 12.

Question 28

The chairman is appointed by who?

Answer 28

The current president for example, ours is Donald Trump. Our chairman is Jerome Powell. So Jerome was set by trump.

Question 29

How long is the term for the chairman?

Answer 29

It is 4 years.

Question 30

What is inflatation:

Answer 30

It is when food prices for any goods/service increase over time because the money is needed to buy them

Question 31

What are the 3 theories to explain inflation?

Answer 31

1. If the amount of money grows faster than the amount of goods/services = scarcity /inflatation
2. If the demand for goods is higher than the amount of goods
3. So finally,
   If it costs business’ more money to procure goods/services.

Question 32

What is a way inflatation can be good?

Answer 32

• it is slow and gradual

Question 33

What is another way inflatation CAN BE good?

Answer 33

It can help with employment levels, the Fed found 25% income inflatation over time helps it. That is a very good thing.

Question 34

True or false:

Inflatation can be bad

Answer 34

True it can be bad and good.

Question 35

True or false:

Inflatation can cause prices to increase faster than wages do.

Answer 35

True!,

Question 36

What are two bad things about inflation?

Answer 36

1. It can cause PANIC.
   It causes panic because of the price increases
2. It is difficult for some to buy goods/services also because of the prices raising.

Question 37

Inflatation can also reduce ______.

Answer 37

Inflatation can also reduce spending.

Question 38

What is deflation?

Answer 38

It is the opposite of inflation. It is a decrease of prices, while inflatation is an increase.

Question 39

When does deflation happen?

Answer 39

It happens when unemployment is high so they would need to lower prices to help the unemployed. It is all a cycle.