Types of Money and Functions

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Questions and Answers

What is one primary function of money?

Standard of Technological Advancement

Unit of Property Ownership

Medium of Exchange (correct)

Manager of Economic Growth

What does the term 'Token Money' refer to?

Rare metals traded for immediate goods

Currency with real value equal to its face value

Legal tender issued by a central bank

Money whose face value is higher than intrinsic value (correct)

Why is durability considered a useful characteristic of money?

It allows money to remain relevant regardless of economic changes.

It allows money to appreciate in value over time.

It guarantees that money can be used for all types of exchanges.

It ensures that money does not wear out easily during transactions. (correct)

What problem was created by using uncoined metals?

Difficulty measuring weight and value Signup and view all the answers

Which of these is a feature that distinguishes coined metallic money from uncoined metals?

Standard weight and value Signup and view all the answers

What is one disadvantage of using paper money?

It can be easily damaged or lost. Signup and view all the answers

Which of these statements about credit money is true?

It can facilitate transactions without immediate cash. Signup and view all the answers

What defines a fully bodied coin?

It equates its face value to the metal it contains. Signup and view all the answers

What was used as currency during the Japanese occupation in the Philippines?

War notes issued by Japanese Occupation Forces Signup and view all the answers

Which bank was established following the independence of the Philippines in 1946?

Central Bank of the Philippines Signup and view all the answers

What nickname was given to the war notes during the Japanese occupation?

Mickey Mouse money Signup and view all the answers

Which series of notes were first issued by the Central Bank of the Philippines?

English series notes Signup and view all the answers

What was the primary language used in Philippine currency notes before the establishment of the Central Bank in 1949?

Spanish Signup and view all the answers

How did the outbreak of World War II affect the Philippine monetary system?

It caused serious disturbances in the monetary system Signup and view all the answers

What year did the Philippines gain independence from the United States?

1946 Signup and view all the answers

What material were the English series coins minted from?

Metal from the US Bureau of Mint Signup and view all the answers

What tactile feature is primarily responsible for helping the public recognize banknotes?

Embossed prints on the surface Signup and view all the answers

What characteristic of the security thread is true for the 100-, 200-, 500- and 1000-piso notes?

It runs vertically and exhibits color change from red to green Signup and view all the answers

At what angle must the note be tilted to clearly see the concealed value?

45 degrees Signup and view all the answers

Which feature on banknotes provides the highest level of tactile anti-counterfeiting protection?

Embossed prints Signup and view all the answers

What is the purpose of the cleartext found on the security thread of higher denomination notes?

To read as 'BSP' on both sides Signup and view all the answers

The main material used for traditional banknotes to provide a tactile effect is:

Cotton-based paper Signup and view all the answers

Which of the following elements contributes to the visual security of banknotes?

The tilt and rotation to reveal hidden features Signup and view all the answers

What type of security feature is primarily used as a first line of defense against counterfeiting?

Embossed prints Signup and view all the answers

What was the purpose of the redesign announced by the Bangko Sentral ng Pilipinas in 2009?

To enhance security features and improve durability Signup and view all the answers

Which of the following features were retained in the New Generation Currency series from the New Design Series?

The size and predominant colors Signup and view all the answers

What specific addition was made to the 500-piso note in the New Generation Currency series?

An added portrait of President Corazon Aquino Signup and view all the answers

When did the Bangko Sentral ng Pilipinas begin releasing the initial batch of new banknotes?

December 16, 2010 Signup and view all the answers

What notable feature characterizes the enhanced NGC banknotes launched in 2020?

They are more responsive to the needs of the elderly and visually impaired Signup and view all the answers

What is one of the main themes depicted on the new banknote designs?

Famous Filipinos and iconic natural wonders Signup and view all the answers

What type of technology was included in the enhanced NGC banknotes to address security concerns?

Anti-counterfeiting technology Signup and view all the answers

Which statement about the New Generation Currency series is true?

They are legal tender in the Philippines. Signup and view all the answers

What is the primary function of the Optically Variable Device (OVD) patch found on the 500- and 1000-piso notes?

It changes color when viewed from various angles. Signup and view all the answers

What is included in the definition of money supply?

The total amount of cash and cash equivalents available to the public. Signup and view all the answers

Which of the following represents Money Supply M0 in the Philippines for July 2023?

1891167.79 php million Signup and view all the answers

What color change does the Optically Variable Ink (OVI) on the 1000-piso note exhibit?

Green to blue Signup and view all the answers

What type of features are classified as Level II security features?

Only detectable by professional cash handlers with special equipment. Signup and view all the answers

In the context of money supply, what does the term 'monetary base' refer to?

Highly liquid forms of money such as notes, coins, and bank reserves. Signup and view all the answers

How does the money supply relate to the public?

It refers to the total cash and equivalents available to households, firms, and institutions excluding banks and government. Signup and view all the answers

What is a common misconception about the definition of money supply?

Money supply does not include commercial bank reserves. Signup and view all the answers

Study Notes

Money and Monetary Systems

Grains and food historically served as currency.
Money evolved from uncoined metals, which lacked standardized weight and value.
Coined metals emerged, resolving many issues associated with uncoined forms.
A "fully bodied coin" has a face value equal to its metal value, while "token money" has a higher face value than intrinsic value.

Functions of Money

Serves as a medium of exchange for goods and services.
Acts as a store of value for wealth preservation.
Functions as a unit of account for measuring value (divisible, fungible, countable).
Establishes a standard for deferred payment, crucial for credit transactions.

Characteristics of Useful Money

Durability: Resists wear and tear.
Portability: Easily transported.
Divisibility: Can be broken down into smaller units.
Uniformity: Consistent features for easy recognition.
Limited Supply: Restriction on availability to maintain value.

Historical Currencies

Persian Daric: Gold coin used in Persia from 522 BC to 330 BC.
Roman Currencies: Aureus (gold), denarius (silver), and sestertius (bronze) circulated from 250 BC to AD 250.

Evolution of Philippine Currency

Post-independence, currencies transitioned from Spanish to English notes following WWII.
The Central Bank of the Philippines was established in 1949; introduced English series banknotes and coins.
Japanese occupation (WWII) resulted in circulating "Mickey Mouse" money, unbacked by reserves.

Banknote Series in the Philippines

New Design Series (1985-2017): Introduced to enhance security and durability.
New Generation Currency Series (2010-present): Focused on improved security features for elderly and visually impaired individuals.
Initial release of new banknotes began on December 16, 2010.

Security Features of Banknotes

Level I: Basic features for public recognition (e.g., embossed prints, security threads).
Level II: Advanced features for cash handlers (e.g., microprinting, ultraviolet security fibers).

Money Supply

Represents total cash and cash equivalents available to the public.
Money supply in the Philippines indicated a decline from 1927227.99 PHP million in June 2023 to 1891167.79 PHP million in July 2023.
The monetary base includes circulating currency and commercial bank reserves, highlighting liquidity in an economy.

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Description

Explore the historical concepts of money, including grains and metals as currency. This quiz covers types of metallic money, their functions, and the challenges associated with uncoined metal transactions. Test your knowledge on how money facilitates exchange and value measurement.