3.1 Money Answers

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21
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What gives commodity money its value?

A
a government’s guarantee of its value
B
the type of material with which it is made
C
its rate of exchange in other countries
D
the ability to trade it for a valuable good
22
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What kind of money is a gold certificate considered to be?

A
commodity
B
fiat
C
representative
D
currency
23

What is a potential disadvantage of using debit cards when compared to barter and traditional currency?

A
collaborative
B
wide acceptance
C
ease of overspending
D
more privacy and flexibility
24

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.
25

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
26

People might choose to use a debit card rather than cash for purchases because

A
they do not want to carry around large amounts of cash.
B
their banking institutions charge high fees for cash withdrawals.
C
most items cost less when purchased with a debit card.
D
debit cards have a higher value than cash and can buy more.
27

What types of money are included in the M2 category? Check all that apply.

A
currency
B
savings accounts
C
checking accounts
D
commodity money
E
short-term investment accounts
28

How is using money related to bartering?

A
It is a substitute for bartering.
B
It is the opposite of bartering.
C
It is a newer form of bartering.
D
It is an old form of bartering.

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