Functions and Characteristics of Money

Which of the following is NOT a function of money?

• Medium of exchange

• Store of value

• Unit of account

• Measure of productivity

Money serves as a unit of account because it:

• Helps in saving wealth for future use

• Facilitates comparison of the value of goods and services

• Makes it possible to barter goods

• Eliminates the need for a central bank

Which of the following is a key characteristic of money?

• Durability

• Scarcity

• Homogeneity

• Flexibility

For an item to be considered money, it must be:

• Physically attractive

• Widely accepted in exchange

• Difficult to divide

• Valued for its intrinsic worth

Which characteristic of money refers to its ability to be easily divided into smaller units?

• Portability

• Divisibility

• Durability

• Stability

Which of the following is an example of commodity money?

• A gold coin

• A check

• A banknote

• A credit card

Fiat money is:

• Backed by a physical commodity such as gold

• Issued and controlled by the government without intrinsic value

• Valuable because of its rarity

• Used primarily for barter transactions

Which of these is an example of digital money?

• Debit card

• Bitcoin

• Cash

• Silver

The barter system was replaced by money because:

• Money is more durable

• Barter relied on a double coincidence of wants

• Money could be printed in large quantities

• People did not need to save wealth in the past

Historically, which material was commonly used as money in early societies?

• Wood

• Salt

• Plastic

• Paper