Topic 5 Money

What is NOT a characteristic of money?

• Divisible

• Portable

• Scarce

• Accessible

Which function of money encourages people to save money?

• Medium of Exchange
• Store of Value
• Unit of Account
• Acceptability

Money that has value because the Government declared that it is money.

• Fiat Money
• Commodity Money
• Currency
• Coins

Money that is valuable in itself besides being money (e.g. tobacco/salt)

• Fiat Money

• Commodity Money

• Currency

• Coins

Money must be easily divided into small parts so that people can purchase goods and  services at any price.

• Divisibility
• Uniformity
• Acceptability
• Durability

Money must be able to withstand the wear and tear of many people using it.

• Divisibility
• Durability
• Limited Supply
• Acceptability

What can be used as money?

• A widely available item.

• Perishable food

• It is anything widely accepted as payment for final goods and services, but has limited availability.

• It is an item that has no value that can be exchanged.

The people of Yap, an island in Micronesia, have used giant stone wheels called rai when executing certain exchange. The rai are heavy and therefore cannot be easily used to make daily transactions in modern economy. What primary characteristic of good money would be violated by using the rai as money in our country? 

• Divisible
• Portable
• Acceptable
• Scarce

The Federal Reserve notes are printed on paper  that is made from 75 percent cotton and 25 percent linen. This high quality paper ensures that a $1 bill left in the pocket of your jeans can survive your washing machine and dryer. If Federal Reserve notes were printed copier paper, what primary characteristic of good money would likely be violated. 

• Acceptable
• Scarce
• Durable
• Stable

To exchange goods or services without using money

• barter

• counterfeit

• denomination

• hologram