ECON 2035 Final: Chapter 3 Questions
Chapter 3
1. Which of the following is measured as a flow per unit of time?
a. Money
b. Wealth
c. Income
2. Which of the following economics has the least efficient payments system?
a. An economy using gold as a commodity money
b. A barter economy
c. An economy using fiat money
d. An economy using currency and deposit money
3. In which of the following economies are goods and services traded directly for other goods and
services
a. An economy using gold as a commodity money
b. A barter economy
c. An economy using fiat money
d. An economy using currency and deposit money
4. Which of the following is not a purpose or function of money?
a. Store of value
b. Medium of exchange
c. Protection against inflation
d. Unit of account
5. Blank
6. With a payments system based on money, John can specialize as a medical doctor and use the
money earned from his efforts to buy all of the things he needs. Which of the functions of
money has been most clearly demonstrated by the scenario above?
a. Store of value
b. Medium of exchange
c. Protection against inflation
d. Unit of account
7. Which of the following is not a characteristic of an effective commodity money?
a. It must be widely accepted
b. It must be standardized
c. It must be divisible
d. It should be able to be easily reproduced by everyone in the economy
e. All of the above are characteristics of an effective commodity money
8. An asset with great liquidity is one that:
a. Can be converted into a medium of exchange with relative ease and speed
b. Generates high transactions costs when liquidating
c. Is an excellent store of value
d. Acts as a unit of account
e. All of the above
9. Which of the following is an example of commodity money?
a. A five dollar bill
b. A check drawn on a bank account in the United States
