Money and Banking

What function of money is illustrated in the given scenario?

Anna uses her debit card to pay for her dinner at a restaurant.

• medium of exchange

• store of value

• unit of account

What function of money is illustrated in the given scenario?

Mikko opens a time deposit account to save the proceeds of his inheritance.

• unit of account

• store of value

• medium of exchange

What function of money is illustrated in the given scenario?

All of the prices of the arcade games in Toyland are stated in terms of Toyland tokens.

• unit of account

• store of value

• medium of exchange

This refers to a system of exchange of goods and services as means of payment between two parties.

Commodity money refers to items that are used as a medium of exchange like cowry shells, cattle and salt.

• TRUE

• FALSE

Which of the following served as an early form of money in the island of Yap?

• knives

• cowry shells

• gigantic limestone donuts

What problems were encountered with the use of commodity money?

• It is heavy and hard to transport.

• It is based on scarcity and could be troublesome when its supply suddenly increases.

• It may not be recognized by other trading nations.

• All of the choices.

The gold standard was set to address issues on inflation and exchange rates.

• TRUE

• FALSE

This refers to a government-issued currency that is not backed up by a physical commodity and guaranteed by the issuing government to have value.

• commodity money

• fake money

• fiat money

• floating money

The following statements show Nicholas Barbon's view on money except _____.

• money's value was principally symbolic and that its main function was to assist trade

• policies intended to help accumulate supposedly "valuable" commodities such as silver and gold were not appropriate

• the government should hoard money due to its intrinsic value

• the main function of money was to assist trade