Evolution Of Money

What is barter?

• Weights of precious metals that were used by some merchants for trading.

• An escort who supported trading by supervising both parties during negotiation so both parties wouldn't cheat the other.

• Negotiating through a tablet and recording different exchanges in trade through sending messages on the tablet.

• Specific items were exchanged for others, agreed by the negotiating parties to be of similar value.

Answer explanation

Barter is the direct exchange of specific items between parties, where both agree on their similar value, making it a fundamental form of trade without using money.

What was the early evidence of trade records?

• Paper IOUs that were traded as currency, and could be exchanged for coins.

• Circular weights of defined metals that were used by some merchants for trading.

• Pictures of items were used to record exchanges, becoming more complex as values were established

• Specific items were exchanged that were agreed by negotiating parties to be of similar value.

Answer explanation

The correct choice highlights that early trade records used pictures of items to document exchanges, evolving in complexity as values were established, reflecting the development of trade practices.

What is coinage?

• Defined weights of precious metals used by some merchants that was then issued by state.

• Paper notes that represented IOUs that were traded as currency, and could be only be traded for coins

• Negotiating parties agreed that two items were of similar value and exchanged for.

• A picture of an item is carved into a stone tablet to document and establish an IOU.

Answer explanation

Coinage refers to defined weights of precious metals, which were standardized and issued by the state for use as currency. This distinguishes it from other forms of currency like paper notes or barter systems.

What are bank notes?

• Merchants used defined weights to trade which was later formalised and used by state.

• States began issuing paper IOUs that were traded as currency and can be exchanged for coins at any time.

• IOUs were recorded on tablets and given to state to formalise a transaction and can be exchanged for goods.

• Exchanges of items that were regarded by both negotiating parties to be of similar value.

Answer explanation

Bank notes are paper IOUs issued by states that serve as currency, allowing holders to exchange them for coins, facilitating trade and commerce.

What is digital money?

• A form of money that is documented and established on stones to determine the value of certain objects.

• Money that includes, cash and coins that are traded by currency and can be exchanged for goods and services.

• A form of trade records used when one of the two negotiating parties create an IOU, creating the first loan.

• Money that exists “virtually” on computers where large transactions are taken place without physical cash being exchanged.

Answer explanation

Digital money refers to currency that exists in a virtual format on computers, allowing for large transactions without the need for physical cash. This distinguishes it from traditional forms of money like cash and coins.

What does macroeconomics do?

• Macroeconomics measures changes in indicators that affect the whole economy.

• Macroeconomics manages the history and archaeological aspect of money.

• Macroeconomics examines the decisions and effects of firms and individuals on the economy.

• Macroeconomics dictates the flow of money in democratic countries through a central bank.

Answer explanation

The correct choice highlights that macroeconomics focuses on measuring changes in broad economic indicators, which is essential for understanding the overall economy's performance.

What does microeconomics do?

• Microeconomics studies the amount people and businesses spend, to decide oncoming tax rates

• Microeconomics examines the effects that decisions of firms and individuals have on the economy

• Microeconomics analyzes the depletion of natural resources to calculate predictions on how long they will last.

• Microeconomics measures the change in indicators that affect the whole economy

Answer explanation

Microeconomics focuses on how individual and firm decisions impact the economy, making the correct choice about examining these effects. The other options misrepresent the scope of microeconomics.

Which of these factors affect macroeconomics?

• Inflation

• Industry

• Money Supply

• Unemployment

Answer explanation

Inflation, money supply, and unemployment are key macroeconomic factors. They influence overall economic activity, affecting growth, prices, and employment levels, while 'industry' is more microeconomic.

Which of these factors affect microeconomics?

• Industrial Organization

• Wages

• Tax Rates

• Natural Resources

Answer explanation

Industrial organization and wages are key microeconomic factors as they directly influence market structures and individual income levels, respectively. Tax rates and natural resources are more macroeconomic in nature.

What is the estimated amount of money in existence today?

• 50 Trillion

• 98 Billion

• 80.9 Trillion

• 809 Billion

Answer explanation

The estimated amount of money in existence today is approximately 80.9 trillion dollars, which includes all forms of money such as cash, bank deposits, and other liquid assets.