Question 1

An economy without money would have no exchanges of goods and services.

Accepted Answer

An economy without money can still have exchanges of goods and services through barter or other systems of trade, where goods and services are directly exchanged without the use of money as a medium.

Question 2

List the five criteria necessary in order for a good to be suitable as a medium of exchange,and explain whether Australian currency is suitable to use as a medium of exchange.
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Accepted Answer

The answer of List the five criteria necessary in order...

Question 3

Among potential stores of value,money

Accepted Answer

Money is the most liquid asset, meaning it can easily be used for transactions or exchanged for other goods and services. It may not offer the highest rate of return or increase in value during inflation, but its liquidity makes it a valuable store of value. It also provides more services than some other assets as it can be used as a medium of exchange and a unit of account.

Question 4

What is 'commodity money'? Give an example.
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Accepted Answer

The answer of What is 'commodity money'? Give an example.
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Question 5

Which of the following is not one of the criteria for a commodity to be a suitable medium of exchange?

Accepted Answer

The other three criteria (durability, standardised quantity, and divisibility) are essential for a commodity to be a suitable medium of exchange. However, having other uses (such as gold being used for jewellery or electronics) does not necessarily disqualify a commodity from being used as a medium of exchange. In fact, some argue that a commodity's usefulness in other areas can enhance its value as a medium of exchange, as it increases its overall demand and scarcity.

Question 6

'Fiat money' is generally issued by _______.

Accepted Answer

Fiat money is generally issued by central banks. Fiat currency is any legal tender whose value is backed by the government that issued it, rather than a commodity such as gold or silver. Central banks, such as the Federal Reserve in the US, are responsible for controlling the supply of fiat money and ensuring its stability. Private banks create money through loans, but they do not issue legal tender. Brokerage firms and multinational corporations are not authorized to issue currency.

Question 7

Which of the following criteria would make gold a poor medium of exchange?

Accepted Answer

Gold's value depends on its purity, which is not easy to visibly identify, making it difficult to determine its exact value in transactions. This would make it a poor medium of exchange as it would lead to trust issues and potential disputes over the value of the gold being exchanged.

Question 8

A car dealer sells you a car today in exchange for money in the future.This illustrates which function of money?

Accepted Answer

This transaction involves exchanging money in the future, making it an example of the function of money known as a standard of deferred payment. This function refers to the ability of money to facilitate transactions over time, allowing for purchases to be made where payment is delayed or scheduled for a future date.

Question 9

Explain why Australia's currency is suitable to use as a medium of exchange.
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Accepted Answer

The answer of Explain why Australia's currency is suitable to...

Question 10

Gold is an example of _______.

Accepted Answer

Gold is an example of commodity money, which means it has intrinsic value and can be used as a medium of exchange. Fiat money (B) has no intrinsic value and is only valuable because a government says it is. Barter money (C) refers to the direct exchange of goods and services without the use of money. M3 (D) is a measure of the money supply in an economy, and not a type of money.

Question 11

In Australia,currency includes

Accepted Answer

Currency in Australia includes notes and coins. Gold, silver, and paper money are not commonly used as currency in Australia. Cheque and savings accounts and money held in term deposits are not considered physical currencies.

Question 12

Why must money serve as a store of value for it to also be a medium of exchange?
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Accepted Answer

The answer of Why must money serve as a store...

Question 13

'Fiat money':

Accepted Answer

Fiat money is currency that a government has declared to be legal tender but has no intrinsic value. It is valuable only because the government guarantees it as a means of payment.

Question 14

What are the functions of money?
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Accepted Answer

The answer of What are the functions of money?
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Question 15

Governments in the world today issue fiat money that cannot be redeemed for gold.

Accepted Answer

Most governments today issue fiat money that is not backed by a physical commodity such as gold, meaning that it cannot be redeemed for gold or any other commodity. The value of fiat money is based on the perceived trust and stability of the government and economy issuing it.

Question 16

Why is gold not a good medium of exchange?
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Accepted Answer

The answer of Why is gold not a good medium...

Question 17

What is 'money'? What are the main functions that money performs,and which function of money is its primary function?
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Accepted Answer

The answer of What is 'money'? What are the main...

Question 18

When employees receive their wages after they have completed two weeks' work,this is an example of money serving as a standard of 'deferred payment'.

Accepted Answer

The statement is true. Deferred payment refers to the concept of receiving payment or settling a debt at a later time, often after a certain period or milestone has been met, such as the completion of a certain amount of work or a specific time frame. In this case, receiving wages at the end of a two-week period is an example of money serving as a standard of deferred payment.

Question 19

A 'good' is more likely to be adopted as money in an economy if

Accepted Answer

For a good to become widely adopted as money in an economy, it needs to be widely accepted as a means of payment for transactions and debts among all citizens. While government declarations and gold backing can provide some level of legitimacy and stability, ultimately it is the acceptance and use of the good by individuals within the economy that determines its effectiveness as a form of money.

Question 20

Paper currency

Accepted Answer

Paper currency is not backed by a physical commodity, such as gold, and has value only because the government declares it to be legal tender, making it fiat money.

Quiz 16: Money,banks and the Reserve Bank of Australia

An economy without money would have no exchanges of goods and services.

List the five criteria necessary in order for a good to be suitable as a medium of exchange,and explain whether Australian currency is suitable to use as a medium of exchange. _ _

Among potential stores of value,money

What is 'commodity money'? Give an example. _ _

Which of the following is not one of the criteria for a commodity to be a suitable medium of exchange?

'Fiat money' is generally issued by _______.

Which of the following criteria would make gold a poor medium of exchange?

A car dealer sells you a car today in exchange for money in the future.This illustrates which function of money?

Explain why Australia's currency is suitable to use as a medium of exchange. _ _

Gold is an example of _______.

In Australia,currency includes

Why must money serve as a store of value for it to also be a medium of exchange? _ _

'Fiat money':

What are the functions of money? _ _

Governments in the world today issue fiat money that cannot be redeemed for gold.

Why is gold not a good medium of exchange? _ _

What is 'money'? What are the main functions that money performs,and which function of money is its primary function? _ _

When employees receive their wages after they have completed two weeks' work,this is an example of money serving as a standard of 'deferred payment'.

A 'good' is more likely to be adopted as money in an economy if

Paper currency

Quiz 16: Money,banks and the Reserve Bank of Australia

An economy without money would have no exchanges of goods and services.

Among potential stores of value,money

What is 'commodity money'? Give an example. _____________________________________________________________________________________________ _____________________________________________________________________________________________

Which of the following is not one of the criteria for a commodity to be a suitable medium of exchange?

'Fiat money' is generally issued by _______.

Which of the following criteria would make gold a poor medium of exchange?

A car dealer sells you a car today in exchange for money in the future.This illustrates which function of money?

Explain why Australia's currency is suitable to use as a medium of exchange. _____________________________________________________________________________________________ _____________________________________________________________________________________________

Gold is an example of _______.

In Australia,currency includes

Why must money serve as a store of value for it to also be a medium of exchange? _____________________________________________________________________________________________ _____________________________________________________________________________________________

'Fiat money':

What are the functions of money? _____________________________________________________________________________________________ _____________________________________________________________________________________________

Governments in the world today issue fiat money that cannot be redeemed for gold.

Why is gold not a good medium of exchange? _____________________________________________________________________________________________ _____________________________________________________________________________________________

When employees receive their wages after they have completed two weeks' work,this is an example of money serving as a standard of 'deferred payment'.

A 'good' is more likely to be adopted as money in an economy if

Paper currency

What is 'commodity money'? Give an example. _ _

Explain why Australia's currency is suitable to use as a medium of exchange. _ _

Why must money serve as a store of value for it to also be a medium of exchange? _ _

What are the functions of money? _ _

Why is gold not a good medium of exchange? _ _