Economics Topic 6

Before the use of money, what trading system did most of the world use?

• Barter system

• Credit system

• Digital currency

• Stock exchange

What are the three uses for money?

• Medium of exchange, store of value, unit of account

• Investment, savings, credit

• Barter, trade, exchange

• Lending, borrowing, spending

Why is it important that money be divisible?

• To allow for easy trade of goods

• To increase its value

• To make it more durable

• To prevent counterfeiting

Why is it important for the supply of money to be limited?

• To prevent inflation

• To increase spending

• To encourage saving

• To promote lending

What type of money does the United States use today?

• Fiat money

• Commodity money

• Barter system

• Digital currency

In economics, what does liquidity mean?

• The ease of converting assets to cash

• The amount of money in circulation

• The interest rate on loans

• The value of a country's currency

What is the more common term for demand deposits?

• Checking accounts

• Savings accounts

• Fixed deposits

• Investment accounts

What does it mean to default on a loan?

• Failing to repay the loan

• Paying off the loan early

• Refinancing the loan

• Increasing the loan amount

What is a mortgage?

• A loan for purchasing property

• A type of insurance

• A savings account

• A stock investment

What is the difference between principal and interest?

• Principal is the original amount borrowed, interest is the cost of borrowing

• Principal is the cost of borrowing, interest is the original amount borrowed

• Principal is the total repayment, interest is the monthly payment

• Principal is the monthly payment, interest is the total repayment