Money & Banking Lecture 1: Introduction to Money Definition & Functions
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Questions and Answers

Which of the following is NOT a characteristic of money?

  • Indivisibility (correct)
  • Acceptability
  • Durability
  • Transportability
  • What is commodity money?

  • Money that is backed 100% by precious metals
  • Money made from certain stones and cigarettes
  • Money that is widely used and accepted in transactions
  • Money that represents a specific amount of a commodity such as gold or silver (correct)
  • Which type of money has no consumption or investment use and is basically useless pieces of paper?

  • Commodity money
  • Fiat money (correct)
  • Plastic money
  • Representative money
  • What does divisibility mean in the context of money?

    <p>Money can be divided into small increments for exchange</p> Signup and view all the answers

    Which characteristic of money refers to its ability to be easily moved from one location to another when needed?

    <p>Transportability</p> Signup and view all the answers

    What does fiat money refer to?

    <p>Money declared by the government to be legal tender with no intrinsic value</p> Signup and view all the answers

    What is the meaning of 'noncounterfeit ability' in the context of money?

    <p>The inability to easily duplicate money</p> Signup and view all the answers

    What is the primary responsibility of a country's Government in relation to the supply of money?

    <p>To control and maintain an adequate money supply to the market</p> Signup and view all the answers

    Which type of money consists of the book credit that banks extend to their depositors?

    <p>Bank money/checks</p> Signup and view all the answers

    What does 'plastic money' refer to in the context of the text?

    <p>Hard plastic cards used as a substitute for actual bank notes</p> Signup and view all the answers

    What is the primary function of money as a 'unit of value'?

    <p>Measuring the value of goods and services produced in an economy</p> Signup and view all the answers

    'Medium of exchange' refers to money's function as:

    <p>Facilitating transactions of goods and services</p> Signup and view all the answers

    'Standard of deferred payments' primarily relates to:

    <p>The basis for deferred payments</p> Signup and view all the answers

    'Store of value' in relation to money implies:

    <p>The ability to retain its value over time</p> Signup and view all the answers

    What does 'fiat money' represent?

    <p>Money whose value is less than the value it represents as money</p> Signup and view all the answers

    Which type of money has been replaced with fiat money?

    <p>Commodity money</p> Signup and view all the answers

    Which characteristic of money ensures that it does not easily decompose, deteriorate, degrade, or otherwise change form over an extended period of time?

    <p>Durability</p> Signup and view all the answers

    Which type of money is backed 100% by precious metals?

    <p>Commodity money</p> Signup and view all the answers

    What characteristic of money allows it to be divided into small increments for the exchange of goods with varying values?

    <p>Divisibility</p> Signup and view all the answers

    Which function of money specifically refers to its ability to be widely used and accepted in transactions for the transfer of goods and services?

    <p>Medium of exchange</p> Signup and view all the answers

    What type of money has no consumption or investment use and is essentially worthless pieces of paper?

    <p>Fiat money</p> Signup and view all the answers

    'Checks' and 'e-money' primarily fall under which category of money?

    <p>Representative money</p> Signup and view all the answers

    What is the primary function of money as a 'standard of deferred payments'?

    <p>It serves as a basis for maintaining accounts of deferred payments.</p> Signup and view all the answers

    What does 'fiat money' represent?

    <p>A good, the value of which is less than the value it represents as money.</p> Signup and view all the answers

    What does 'store of value' in relation to money imply?

    <p>The ability to store surplus value under barter.</p> Signup and view all the answers

    What is the meaning of 'limited supply' in relation to money?

    <p>It refers to the restriction on the amount of money in circulation.</p> Signup and view all the answers

    Which type of money consists of the book credit that banks extend to their depositors?

    <p>Bank money/checks</p> Signup and view all the answers

    'Plastic money' is used in reference to:

    <p>Hard plastic cards used in place of actual bank notes.</p> Signup and view all the answers

    'Fiat money' has replaced which type of money?

    <p>Commodity money</p> Signup and view all the answers

    'Acceptability' means that:

    <p>Everyone must be able to use money for transactions.</p> Signup and view all the answers

    What does 'noncounterfeit ability' mean in the context of money?

    <p>Money cannot be easily duplicated.</p> Signup and view all the answers

    What does 'commodity money' refer to?

    <p>A good whose value serves as the value of money.</p> Signup and view all the answers

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