Module 2: Financial Institutions

Money or other substance generally accepted as payment for goods and services.

• Measure of value

• Medium of exchange

• Scarcity

• Store of Value

What are the 3 functions of money?

• Measure of Gold

• Store of Value

• Medium of Exchange

• Store of Bank Notes

• Measure of Value

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

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

Anything of value

• asset

• equity

• liability

• medium of exchange

What is NOT a characteristic of money? 

• Divisible
• Portable
• Acceptable
• Accessible

The fact that money can be stored or saved, must keep its value, and must be non-perishable describes what function of money?

• Acceptability
• Unit of Measure
• Medium of Exchange
• Store of Value

What's the problem with using 5 pound iron bricks as money?

• portability

• unit of account

• store of value

• liquidity

Inflation--if not controlled--can erode this function of money.

• store of value

• unit of account

• medium of exchange

• divisibility