AnswersOC27 Economics-2102310-Sem-MeadowsMoney

3.1 Money Answers

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1
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What kind of money is a gold certificate considered to be?

A
commodity
B
fiat
C
representative
D
currency
2
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The term liquidity refers to

A
how quickly money can be exchanged.
B
the true monetary value of an investment.
C
the shifting supply of money in the economy.
D
how much wealth an individual has amassed.
3

What would happen if currency in all countries had fewer denominations, i.e. fewer varieties of coins or numbers of bills?

A
People would be more likely to confuse the value of currencies.
B
Exchanging money between countries would be much easier.
C
People could not charge as many different prices for goods.
D
All goods would be more expensive than they currently are.
4

Exchange rates can indicate economic health by

A
showing exactly how much of each nation’s currency is liquid.
B
revealing how much of each nation’s income goes to savings.
C
showing the relative strength of different nations’ currencies.
D
examining spending patterns across nations and continents.
5

When might it be important to know a currency’s exchange rate?

A
when planning expenses for an overseas trip
B
when changing money into smaller denominations
C
when preparing to buy something expensive
D
when deciding which college is the best value
6

Which is an advantage of using modern currency instead of a barter system?

A
risk of a loss in value or counterfeiting
B
difficulty in determining the value of goods
C
ability to store and use a form that is accepted everywhere
D
a limited amount of goods and services available
7

A currency’s exchange rate is

A
how many denominations the currency has.
B
its stable rate as established by the government.
C
how easily it can be divided into other currencies.
D
its changing value relative to other currencies.
8

Which of these scenarios involves commodity money?

A
A girl writes a check to her friend for a stack of valuable comic books.
B
A boy starts a lemonade stand and sells each drink for twenty-five cents.
C
A woman offers her neighbor a US silver dollar in exchange for a bicycle.
D
A man buys some T-shirts and pays with a US fifty-dollar bill.
9

What might cause a change in the value of fiat money?

A
a change in the value of commodities
B
a change in government regulations
C
a change in materials used to make money
D
a change in individuals’ spending habits
10

What is true of representative money? Check all that apply.

A
It can be exchanged for a valuable good.
B
It was once the most common form of money.
C
It was used in systems involving a "gold standard."
D
It can be traded for a commodity such as silver.
E
It is made with precious metals or stones.

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