The Evolution, Functions, and Characteristics of Money

Front

What is the primary function of money in an economy?

Back

To serve as a medium of exchange

Front

Which characteristic of money ensures that it can withstand being used repeatedly?

Back

Durability

Front

What does it mean for money to be divisible?

Back

It can be easily broken down into smaller units

Front

Why is it important for money to have a limited supply?

Back

To maintain its value and prevent inflation

Front

Which of the following best describes fiat money? Options: Money backed by precious metals, Money that has value because the government says it does, Money that is only used in barter systems, Money that loses value over time

Back

Money that has value because the government says it does

Front

How did commodity money differ from fiat money?

Back

Commodity money has intrinsic value, while fiat money does not.

Front

What is the main disadvantage of barter systems compared to monetary systems?

Back

They require a double coincidence of wants.

Front

Which of the following is an example of commodity money? Paper currency, Gold coins, Credit cards, Digital payments

Back

Gold coins

Front

Why did societies move from commodity money to fiat money?

Back

Fiat money is easier to produce and manage.

Front

What function of money allows it to be used to compare the value of goods and services?

Back

Unit of account