Money, Banking, Saving and investing

Money functions as

• a medium of exchange.

• a standard of value.

• a store of value.

• all of the above.

Legal tender is

• the quantity of goods and services that can be bought with a particular sum of money.

• the medium of exchange that must be accepted as money for purchases and as payment for debts.

• an institution that brings together sellers and buyers in financial markets.

• a card that allows you to access the money in your bank account.

The six main characteristics of money are acceptability, portability, divisibility, uniformity

• abundance, and solubility.

• scarcity, and durability.

• inflexibility, and inconsistency.

• fragility, and profusion

Throughout history, why were gold and silver the preferred kinds of commodity money?

• They were easier to transport than banknotes.

• They had all six of the main characteristics of money.

• They could be used not only for money, but also for food.

• They were guaranteed by the full faith and credit of the government

An entrepreneur who needs financial help in buying new equipment for her thriving bakery might take out a

• commercial loan.

• certificate of deposit.

• mortgage loan.

• consumer loan.

What is a bank's main function?

• to protect the nation's financial status by holding all of its deposits in reserves

• to issue Federal Reserve notes, the paper currency we know as dollars

• to serve as a financial intermediary between savers and borrowers

• to make sure consumers save enough money for retirement

The system in which banks keep a portion of deposits in reserve and make loans with the rest is known as

• 401(k) retirement plans.

• fractional reserve banking.

• he barter method.

• the Federal Reserve system.

If you wanted to earn the greatest amount of interest on your deposits, which kind of account should you choose?

• a checking account

• a savings account

• a credit card account

• a certificate of deposit

The average American puts aside what percentage of his or her income as savings?

• less than 3 percent

• nearly 8 percent

• about 10 percent

• more than 12 percent

Why should you put aside money as savings?

• to contribute to national economic growth

• to help you reach important personal goals

• to provide you with a safety net during hard times

• all of the above