Money and Banking

Question 1

Anything that people will accept as payment for goods and services

Answer 1

Money

Question 2

What three functions does money perform?

Answer 2

Medium of Exchange,
Standard of Value,
Store of Value

Question 3

Money must serve as a ___

Answer 3

Medium of Exchange

Question 4

A means through which goods and services can be exchanged

Answer 4

Medium of Exchange

Question 5

The exchange of goods and services without using money

Answer 5

Barter

Question 6

Determines the economic worth in the exchange process

Answer 6

Standard of Value

Question 7

Something that holds its value over time

Answer 7

Store of Value

Question 8

One situation where money does not function well as a store of value?

Answer 8

When the economy experiences siginificant inflation

Question 9

Sustained rise in the general level of prices

Answer 9

Inflation

Question 10

Pyhsical properties of money

Answer 10

• *****Durability
• *****Portability
• *****Divisibility
• *****Uniformity

Question 11

Economic Properties of Money

Answer 11

Stability of Value
Scarcity
Acceptability

Question 12

Three sources money draws its value from?

Answer 12

Commodity Money
Representative Money
Fiat Money

Question 13

Derives its value from the type of material from whihc it is composed

Answer 13

****Commodity Money******

Question 14

The most common form of commodity money throughout history has been coins made from?

Answer 14

Precious Metals

Question 15

Paper money backed by something tangible – gold or silver – that gives it value

Answer 15

Representative Money

Question 16

Earliest forms of Representative money were seen when?

Answer 16

In the Middle Ages

Question 17

Who began issuing receipts that promised to pay a certain amount of gold or silver?

Answer 17

Merchants, goldsmiths, and moneylenders

Question 18

Declared by the govt. and accepted by citizens to have worth

Answer 18

Fiat Money

Question 19

Value of the U.S Dollar linked to the value of gold until

Answer 19

**1971**

Question 20

Coins contain only a fair amount of precious metals that is worth far less than the face value of those coins

Answer 20

Fiat Money

Question 21

Crucial Role in maintaining the value of fiat money is?

Answer 21

Controlling its supply – maintain its scarcity

Question 22

Paper Money

Answer 22

Currency

Question 23

What are called Demand Deposits?

Answer 23

Checking accounts

Question 24

Why are demand deposits called demand deposits?

Answer 24

Because funds in checking accounts can be converted into currency “on demand”

Question 25

Savings accounts and time deposits that can be converted into cash relatively easily

Answer 25

Near Money