Understanding Money and Monetary Policy

Which of the following best describes fiat money?

• Money that has intrinsic value and can be used for other purposes

• Money that has value because a government maintains it and people have faith in its value

• Money that represents a claim on a commodity and can be exchanged for it

Which of the following is a characteristic of representative money?

• It has intrinsic value

• It is backed by a physical commodity

• It is not backed by any physical commodity

What is the primary role of the Federal Reserve System?

• To print money for the U.S. Treasury

• To regulate and oversee the banking system and implement monetary policy

• To set tax rates for the federal government

What significant change occurred in 1971 regarding the U.S. dollar?

• The U.S. dollar was removed from the gold standard

• The U.S. dollar was made a digital currency

• The U.S. dollar was backed by silver

Which of the following best describes the role of the U.S. dollar in the world market today?

• It is rarely used in international trade

• It is the primary reserve currency used globally

• It is only used within the United States

Nora is considering whether to use her debit card or cash for her daily expenses. What is one negative aspect of using debit cards compared to currency?

• Debit cards are less secure than carrying cash

• Debit cards can incur fees and require electronic infrastructure

• Debit cards are not accepted anywhere

How has the role of government in the U.S. free enterprise system changed over time?

• The government has taken a more active role in regulating and stabilizing the economy

• The government has completely withdrawn from economic activities

• The government has shifted to a barter-based economy

Money serves several functions, including (a)  

(b)   (c)  

• medium of exchange that allows the
• holds value over time
• standard of value that allows compa
• used as the only means of trade bet

Which of the following is an advantage of using a credit card?

• Interest is charged for the use of a credit card.

• Consumers can purchase things now, and pay for them later in the event of an emergency.

• You could be a victim of identity theft.

The purchase amount is immediately removed from a linked account.

• Debit Card

• Credit Card

• Stored-Value Card