Functions of $ & Financial Institutions Review

What 3 things must any currency/money be able to do?

• A unit of account

• A store of value

• A medium of exchange

• The thing you used to have before a wife and kids

A saving account in a bank represents the function of money:

• Store of value

• A medium of exchange

• A standard for deferred payments

• A measure of value

Choose the most accurate definition of "money".

• Money is anything generally accepted in payment for goods or services or in the repayment of debts.

• Money is anything recognized in trading and transaction for goods.

• Money is legal currency that is released by banks to satisfy the financial needs of the people.

Which of the following statements explain why a barter system restricts exchange?

• There must be a coincidence of wants

• It is difficult to divide certain commodities

• The commodities used are not homogeneous

• A rate of exchange must be determined

Which of the function is NOT a function of money?

• Indivisibility

• Measure of value

• Store of value

• Medium of exchange

Barter is BEST described as the

• Purchase of goods and services using cheques

• Exchange of goods and services using notes and coins

• Process of exchange involving the use of money

• exchange of goods and services without the use of money

The difference between representative money and fiat money is that

• representative money is worth more than fiat money.

• fiat money is counted in coins; representative money is counted in paper dollars.

• fiat money is more durable than representative money.

• representative money is backed by silver or gold, ; fiat money is not.

Which of the following is not a characteristic of money?

• Divisibility

• Portability

• Acceptability

• Responsibility

Currently, what is U.S. money backed by?

• Frankincense
• Gold
• Silver
• Trust that it is worth something

This characteristic of money refers to the ability to carry it with you---lightweight and easy to transport.

• portability
• uniformity
• acceptability
• stability