Money and Banking - Chapter 10

An essential function for banks is creating money by

• storing all of the deposits.

• loaning a portion of deposits.

• loaning all of the deposits.

• none of the above

Anything that is used to determine value during the exchange of goods and services.

• Store of Value

• Unit of Account

• Medium of Exchange

• Barter System

Money must be easily divided into smaller denominations (ex. making change).

• Durability

• Divisibility

• Acceptability

• Uniformity

If you sell something and choose not to spend the money earned right away, the money is acting as a

• Unit of Account

• Store of Value

• Medium of Exchange

• Demand Deposit

The price paid for the use of borrowed money.

• Barter

• Loan

• Mortgage

• Interest

Money must withstand physical wear and tear from being used over and again.

• Uniformity

• Durability

• Divisibility

• Portability

People can take their money with them easily.

• Portability

• Uniformity

• Durability

• Divisibility

A type of money that has value because it can be exchanged for something else of value (ex. gold).

• certificate money

• representative money

• fiat money

• commodity money

Which of these is an example of M1?

• Savings deposits

• Property

• Cash

• Credit

Objects that have value in themselves and are also used as money.

• Representative money

• Commodity money

• Simple money

• Credit cards