Money and Its Core Functions in a Modern-Day Economy

The video explores the role and evolution of money in the economy, highlighting its core functions: medium of exchange, store of value, and unit of account. It traces the history from barter systems to modern fiat money, discussing the characteristics that make money effective. The video also examines the impact of cryptocurrencies like Bitcoin on traditional monetary systems.

What was a major drawback of the barter system?

• It was highly efficient.

• It required a double coincidence of wants.

• It was too easy to use.

• It allowed for easy division of goods.

What was a key issue with commodity money?

• It was too durable.

• It had a volatile value.

• It was universally accepted.

• It was easy to counterfeit.

Which of the following is NOT a core function of money?

• Source of income

• Unit of account

• Store of value

• Medium of exchange

Why is fiat money considered effective in modern economies?

• It is backed by gold.

• It is difficult to store.

• It has intrinsic value.

• It is accepted by all parties in the economy.

Which function of money is affected by inflation?

• Medium of exchange

• Store of value

• Unit of account

• All of the above

What characteristic of money allows it to be split into smaller units?

• Acceptability

• Durability

• Divisibility

• Portability

Which term describes assets that can be quickly converted to cash?

• Fiat money

• Nonmoney

• Cryptocurrency

• Near money

What is the primary role of a central bank in a monetary system?

• To distribute money evenly

• To regulate and control the money supply

• To create money

• To eliminate all forms of money

Which of the following is a characteristic of money?

• It must be edible.

• It must be durable.

• It must be colorful.

• It must be heavy.

What is a major challenge for cryptocurrencies like Bitcoin?

• They are regulated by central banks.

• They have volatile value.

• They are too stable.

• They are widely accepted.