What is an Economy: History of Money & Economic Agents

What is the barter system?

• A system where goods and services are exchanged for money

• A system where goods and services are exchanged directly without the use of money

• A system where money is exchanged for goods and services

• A system where goods and services are exchanged through a centralised market

Which of the following is an advantage of the barter system?

• Difficulty in finding someone with the desired goods or services

• Lack of a standardised measure of value

• Limited options for exchanging goods and services

• Exchange of physical goods; no "trust" required

What are the characteristics of money?

• Durability, portability, divisibility, scarcity and responsibility

• Durablility, portability, homogeneity, divisibility and acceptability

• Durability, portability, scarcity, beauty and acceptability

• Durability, divisibility, scarcity, homogeneity and acceptability

Which of the following is an example of commodity money?

• Gold coins

• Paper money

• Credit cards

• Digital currencies

What is the main advantage of using commodity money?

• It is easily divisible

• It is widely accepted

• It has intrinsic (natural/in-built) value

• It is easy to carry

“Fiat” money is currency trusted and valued by people because the government says so. Which of the following is an example of fiat money?

• Gold coins

• Silver bars

• Paper money

• Cryptocurrency

What is the main advantage of using fiat money?

• It is backed by a valuable commodity

• 1. It is easily divisible

• 1. It is widely accepted because of trust

• 1. It has intrinsic value

What is inflation?

• A decrease in the overall level of prices in the economy

• The rate at which the government prints money

• An increase in the prices of goods and services over time

• The total value of all goods and services produced in a country in a year

How does inflation affect the purchasing power of your money?

• It makes your money buy less

• It has no effect on your money

• It makes your money buy more

• It turns your money into coins

What does the term "opportunity cost" mean?

• The actual cost of buying something

• The cost of opportunities you give up when you make a choice

• The price of the best item you can buy

• The total money you have in your wallet