Functions and Characteristics of Money

Front

Money’s function as a “store of value” means that it:

Back

Retains its purchasing power over time

Front

Which of the following is the most important characteristic for money to function as a store of value? Stability in value, High liquidity, Acceptance as legal tender, Portability

Back

Stability in value

Front

When prices of goods and services are quoted in terms of money, money is acting as a:

Back

Unit of account

Front

Which of these is the least effective in fulfilling the “medium of exchange” function of money? A check, A credit card, A rare collectible, A paper note

Back

A rare collectible

Front

Which of the following best describes the gold standard? A system where the value of currency is backed by a government’s credit, A system where the value of currency is backed by gold reserves, A system where money is not tied to any physical commodity, A system where governments control the money supply through inflation

Back

A system where the value of currency is backed by gold reserves

Front

Which of the following best describes fiat money? Money that is backed by a physical commodity like gold or silver, Money that has intrinsic value, such as coins made of precious metals, Money that has value because a government declares it to be legal tender, Money that is used only for international trade

Back

Money that has value because a government declares it to be legal tender

Front

True or False: Money cannot function as a store of value if inflation is high.

Back

True

Front

True or False: A unit of account is a function of money that allows it to be easily exchanged for goods and services.

Back

False

Front

True or False: Money acting as a store of value means that it can be saved and retrieved later without significant loss of purchasing power.

Back

True

Front

True or False: The function of money as a unit of account allows individuals and businesses to compare the value of different goods and services.

Back

True