Chapter 14- development of Banking Systems

What is a barter economy?

• An economy where goods are traded for other goods without the use of money.

• An economy solely based on the use of digital currencies.

• An economy where goods are purchased only with fiat money.

• An economy that relies on government regulations for trade.

What type of money is described as having an alternative use as an economic good or commodity?

• Digital money

• Fiat money

• Commodity money

• Virtual money

What defines fiat money?

• Money that is backed by physical commodities.

• Money that has no intrinsic value and is not backed by a physical commodity, but is made legal tender by government decree.

• Money that is exchanged electronically.

• Money that is used in a barter economy.

What type of money was issued by the Continental Congress in 1775 to finance the Revolutionary War?

• Commodity money

• Specie

• Fiat money with gold backing

• Paper money with no gold or silver backing

Which of the following was NOT a form of money used in Colonial America?

• Commodity money

• Paper money issued by individuals

• Electronic currency

• Specie

What backed the paper currency printed by individuals under state laws in Colonial America?

• Nothing, it was unsupported

• Gold and silver deposits in banks

• Promises of future commodity deliveries

• The authority of the Continental Congress

Which characteristic of money ensures that it can be easily transferred from one person to another?

• Limited supply

• Reasonably durable

• Portable

• Divisible

Why must money be reasonably durable?

• To ensure it can be divided into smaller units

• To prevent it from deteriorating when handled

• To make it easily transferable

• To keep it in limited supply

What does it mean when money is described as being in 'limited supply'?

• It is durable

• It is easily transferable

• It is available but not in excess

• It can be divided into smaller units

What is a problem associated with money being divisible?

• It makes the money less durable

• It complicates the transfer of money

• It can lead to a shortage of money

• The problem with cents