16 Money and Banking Review

Which of the following is not the main forms of money?

• cash

• bank deposits

• central bank reserves

• gift certificate

Which option is a characteristics of money?

• medium of exchange

• unit of account

• portability

• store of value

When describing a function of money, what does ‘a store of value’ mean?

• Money is used to exchange for goods and services

• Money circulates around the economy over time

• Money may be kept for future spending

• Money does not lose its value over time

'Money enables people to borrow and lend'. Which function of money does this describe?

• measure of value

• medium of exchange

• standard for deferred payment

• store of value

Which term describes the act of swapping items in exchange for other items in the absence of money?

• bartering

• double coincidence of wants

• negotiation

• unit of account

What does the phrase a medium of exchange mean when describing a function of money?

• Price of an item can be measured in terms of money units.

• Money is generally accepted means of payment

• You can save money because it keeps its value

• Borrowers know how much they need to pay back on a loan

The cowrie shells was used as money so widely because it is hard-wearing and long lasting. Which characteristics of money does this describe?

• divisibility

• acceptability

• scarcity

• durability

What would make an item unsuitable to act as money?

• it is easy to carry

• it is recognizable

• it is generally acceptable

• it is perishable

Money enables people to save. Which function of money does this describe?

• measure of value

• medium of exchange

• standard for deferred payment

• store of value

To act as money, an item should be homogeneous and recognizable. Which characteristics of money does this describe?

• uniformity

• acceptability

• scarcity

• durability