Economics Ch. 16 - Money and Banking

Which of the following is not a function of money?

• It will physically last over time

• It is a medium of exchange

• It is a measure of value

• It can settle debts in different time periods

Which of the following is not a characteristic of money?

• It will physically last over time

• It is uniform in apperance

• It is difficult to forge

• It can settle debts in different time periods

An item that serves as money must be treated as money by all in that economy, i.e. all must agree that iti s a valid form of money

• Durable

• Acceptable

• Divisible

• Scarce

Items that are used as money must be capable of being used as smaller and smaller denominations so as to enable a range of different values to be represented by the item being used.

• Acceptable

• Divisible

• Scarce

• Uniform

For something to be money, the item used must be limited in supply for it to have value

• Acceptable

• Divisible

• Scarce

• Uniform

The item used must have a standard appearance so that it is recognised and seen to represent an agreed fixed amount

• Durable

• Acceptable

• Uniform

• Scarce

The item must physically last and will not wear out too quickly to be useful as money

• Durable

• Acceptable

• Divisible

• Scarce

Bartering is difficult if the items being traded are physically difficult to transport

• Double coincidence of wants

• Portability

• Divisibility

Bartering is difficult if high value items cannot be broken up into smaller value items in order to exchange for low value items

• Double coincidence of wants

• Portability

• Divisibility

Bartering requires that the seller and the buyer want what the other has for exchange, otherwise the transaction cannot take place

• Double coincidence of wants

• Portability

• Divisibility