Banking Answers

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A currency’s exchange rate is

how many denominations the currency has.

its stable rate as established by the government.

how easily it can be divided into other currencies.

its changing value relative to other currencies.

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

risk of a loss in value or counterfeiting

difficulty in determining the value of goods

ability to store and use a form that is accepted everywhere

a limited amount of goods and services available

Which of these scenarios involves commodity money?

A girl writes a check to her friend for a stack of valuable comic books.

A boy starts a lemonade stand and sells each drink for twenty-five cents.

A woman offers her neighbor a US silver dollar in exchange for a bicycle.

A man buys some T-shirts and pays with a US fifty-dollar bill.

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

a change in the value of commodities

a change in government regulations

a change in materials used to make money

a change in individuals’ spending habits

The term liquidity refers to

how quickly money can be exchanged.

the true monetary value of an investment.

the shifting supply of money in the economy.

how much wealth an individual has amassed.

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