Which of the following is a drawback of commodity money?

Lower quality commodities can drive higher quality ones out of circulation.

No historical examples of inflation

Historical examples show the drawbacks of commodity money.

Commodity money can be bulky and difficult to transport.

Commodity money is always stable in value.

Commodity money is universally accepted without any issues.

Commodity money does not require any storage.

What is representative money?

A type of currency that represents a claim on a commodity

A type of currency that has intrinsic value

A type of currency that is backed by a government decree

A type of currency that is used in digital transactions

Which of the following is an example of representative money?

Paper certificates backed by gold

Representative money is easier to carry than actual commodities because:

It is lighter and more portable.

What are examples of fiat money?

Modern currency like dollar bills

What does bank money refer to?

Credit banks offer to depositors

Which of the following is a characteristic of narrow money?

It is the most liquid form of money

It is used for long-term investments

The role of acceptance in money is:

To ensure money is widely recognized and trusted as a medium of exchange

To increase the physical durability of money

To enhance the aesthetic appeal of currency

To limit the supply of money in the economy

What might people do if trust in fiat money is lost?

Increase savings in fiat currency

People trust fiat money over commodity money because:

Fiat money is more stable and widely accepted.

Fiat money is backed by a physical commodity.

Commodity money is more convenient to use.

Commodity money has no intrinsic value.

Inflation affects the value of money by:

Decreasing the purchasing power

Increasing the purchasing power

Having no effect on purchasing power

Stabilizing the purchasing power

What are the primary functions of money?

A) Medium of Exchange and Measure of Value

B) Standard of Deferred Payments and Store of Value

C) Medium of Exchange and Store of Value

People trust fiat money (like dollar bills) more than commodity money (like gold or silver) because:

Fiat money is backed by the government.

Commodity money is not widely accepted.

Fiat money has intrinsic value.

Commodity money is more stable.

Inflation affects the value of money by:

Decreasing the purchasing power

Increasing the purchasing power

Having no effect on purchasing power

Stabilizing the purchasing power

Acceptance is crucial for something to be considered money because:

It ensures widespread use and trust.

It increases the physical durability of money.

It enhances the aesthetic value of money.