Lesson 51 pg. 142 - 144

Question 1

Give the economists term for money

Answer 1

money - anything that is generally accepted as a means of payment

Question 2

List the three principal purposes of money

Answer 2

(1) to be a medium of exchange
(2) to provide a measure of value
(3) to provide a store of value

Question 3

What does it mean by money being a “medium of exchange?”

Answer 3

> medium means “means” or “agent”

>money is a means of exchanging goods without reliance on barter

Question 4

Define barter

Answer 4

barter - the direct exchange of one good for another good without a standard form of money passing from hand to hand

Question 5

What does it mean by money being a measure of value?

Answer 5

> by using some standard unit of money – American dollar, British pound, Japanese yen – we can express how much one material good or service is worth compared with some other good or service
money enables us to measure the value or cost of a particular good against the values of other goods

Question 6

What does it mean by money providing a store of value?

Answer 6

> having wealth stored up in the form of money helps to ensure financial security

Question 7

List the characteristics of ideal money

Answer 7

> portability (easily carried about)
durability (slow to wear out)
homogeneity (standard, recognizable appearance)
divisibility (available for use in both large and small units)
constancy (stability in value)
intrinsic valuableness (worth something in its own right, aside from being recognizable as money)