Topic 6 Test: Money & Banking

Which of these is the best example of commodity money?

• silver certificates
• quarters
• salt
• dollar bills

The shells were once used as money. The characteristics of money that is most similar to our currency today is:

• portability
• divisibility
• limited supply
• uniformity

Why is using money as a medium of exchange preferable to bartering?

• The relative value of bartered goods remains the same over time.
• The value of money fluctuates over time.
• The relative value of goods is difficult to establish in a barter system.
• The value of bartered goods decreases after they are purchased.

Which characteristic of money does this cartoon relate to?

• Money has a limited supply.
• Money is uniform.
• Money is divisible.
• Money is durable.

If you look closely at this bill, you will notice that at the top, it says "Silver Certificate" where most dollar bills say "Federal Reserve Note". How is this bill different from most dollar bills that you see?

• There are no differences between the silver certificate and the Federal Reserve note.
• The Federal Reserve note is backed by something of value, and the silver certificate is backed by the government.
• The silver certificate is fiat money, and the Federal Reserve not is representative money.
• The Federal Reserve note is fiat money, and the silver certificate is representative money.

The Federal Deposit Insurance Corporation (the FDIC) was created by President _______________ .

• Franklin D. Roosevelt
• Abraham Lincoln
• Harry Truman
• Barack Obama

When was the FDIC established, and what is its purpose?

• 1971, to make sure peoples' investments had positive returns
• 1816, to protect banks for faulty corporations
• 1933, to insure peoples' money was safe and secure in the event of a bank's failure
• 1933, for the government to make more money from the taxpayers

How does money act as a "store of value"?

• It gets more valuable with age
• It allows people to keep wealth over time
• It only works in banks
• It loses all its value immediately after earning

Which of the following is NOT a role of money?

• Medium of exchange
• Store of value
• Source of credit
• Unit of account

Why is money considered a "medium of exchange"?

• It is used to make goods
• It is traded for goods and services
• It is used to measure time
• It is collected for taxes