Money and Currency Review

What is the main purpose of money in an economy?

• To decorate banks

• To facilitate the buying and selling of goods and services

• To replace governments

• To eliminate trade

Which of the following is NOT one of the three main functions of money?

• Medium of exchange

• Unit of measure

• Store of value

• Tool of taxation

What is currency?

• Any valuable object

• The official form of money in circulation within a country

• Only gold and silver

• Any digital payment system

Which of the following is an example of physical currency?

• Checking account

• Savings account

• Paper bills and coins

• Cryptocurrency

What gives currency legitimacy in a country?

• Business owners

• Legal tender laws approved by the government

• Online banks

• Private companies

Legal tender means money that:

• Must be saved in a bank

• Is officially accepted for paying debts and taxes

• Is made of gold

• Is used only online

Commodity money has value because:

• It is backed by banks

• It is made of paper

• It has intrinsic value

• Governments print it

What does intrinsic value mean?

• The market price of an item

• The inherent worth based on usefulness or properties

• The amount printed on money

• The exchange rate

Gold and silver are examples of:

• Fiat currency

• Commodity money

• Digital currency

• Counterfeit currency

Why did societies move away from using gold and silver directly as money?

• They were illegal

• They were too easy to divide

• Carrying and dividing them was impractical

• People disliked them