AnswersHSA 26-27 EconomicsMoney

Banking Answers

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1
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A currency’s exchange rate is

A
how many denominations the currency has.
B
its stable rate as established by the government.
C
how easily it can be divided into other currencies.
D
its changing value relative to other currencies.
2
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The term liquidity refers to

A
how quickly money can be exchanged.
B
the true monetary value of an investment.
C
the shifting supply of money in the economy.
D
how much wealth an individual has amassed.
3

What would happen if currency in all countries had fewer denominations, i.e. fewer varieties of coins or numbers of bills?

A
People would be more likely to confuse the value of currencies.
B
Exchanging money between countries would be much easier.
C
People could not charge as many different prices for goods.
D
All goods would be more expensive than they currently are.
4

Which is an advantage of using modern currency instead of a barter system?

A
risk of a loss in value or counterfeiting
B
difficulty in determining the value of goods
C
ability to store and use a form that is accepted everywhere
D
a limited amount of goods and services available
5

In the United States, dollar bills, nickels, and dimes are

A
representative money.
B
commodity money.
C
various currencies.
D
different denominations.
6

What is one problem that might commonly occur when one is bartering?

A
Someone wants to trade a valuable item for a less valuable one.
B
Two people have different ideas about the value of an item.
C
Someone wants to barter a good in exchange for a service.
D
Two people want to trade items of equal or nearly equal value.
7

How is using money related to bartering?

A
It is a substitute for bartering.
B
It is the opposite of bartering.
C
It is a newer form of bartering.
D
It is an old form of bartering.
8

To barter means to

A
sell.
B
create.
C
trade.
D
earn.
9

Exchange rates can indicate economic health by

A
showing exactly how much of each nation’s currency is liquid.
B
revealing how much of each nation’s income goes to savings.
C
showing the relative strength of different nations’ currencies.
D
examining spending patterns across nations and continents.
10

A currency is a system of money created and used by

A
an individual or a group of people.
B
all people who live in the same era.
C
a nation or region of the world.
D
a town, city, or state within a region.
11

Which of the following is the least liquid?

A
savings account
B
checking account
C
credit account
D
investment account
12

A currency is a system of money created and used by

A
an individual or a group of people.
B
all people who live in the same era.
C
a nation or region of the world.
D
a town, city, or state within a region.
13

What would happen if currency in all countries had fewer denominations, i.e. fewer varieties of coins or numbers of bills?

A
People would be more likely to confuse the value of currencies.
B
Exchanging money between countries would be much easier.
C
People could not charge as many different prices for goods.
D
All goods would be more expensive than they currently are.
14

What is one problem that might commonly occur when one is bartering?

A
Someone wants to trade a valuable item for a less valuable one.
B
Two people have different ideas about the value of an item.
C
Someone wants to barter a good in exchange for a service.
D
Two people want to trade items of equal or nearly equal value.
15

What types of money are included in the M2 category? Check all that apply.currencysavings accountschecking accountscommodity moneyshort-term investment accounts

A
currency
B
savings accounts
C
checking accounts
D
commodity money
E
short-term investment accounts
16

What is true of representative money? Check all that apply.It can be exchanged for a valuable good.It was once the most common form of money.It was used in systems involving a "gold standard."It can be traded for a commodity such as silver.It is made with precious metals or stones.

A
It can be exchanged for a valuable good.
B
It was once the most common form of money.
C
It was used in systems involving a "gold standard."
D
It can be traded for a commodity such as silver.
E
It is made with precious metals or stones.
17

People might choose to use a debit card rather than cash for purchases because

A
they do not want to carry around large amounts of cash.
B
their banking institutions charge high fees for cash withdrawals.
C
most items cost less when purchased with a debit card.
D
debit cards have a higher value than cash and can buy more.
18

When might it be important to know a currency’s exchange rate?

A
when planning expenses for an overseas trip
B
when changing money into smaller denominations
C
when preparing to buy something expensive
D
when deciding which college is the best value
19

Exchange rates can indicate economic health by

A
showing exactly how much of each nation’s currency is liquid.
B
revealing how much of each nation’s income goes to savings.
C
showing the relative strength of different nations’ currencies.
D
examining spending patterns across nations and continents.
20

Why must old currency be taken out of circulation when new currency is made?

A
The old currency is more valuable than the new currency.
B
The new currency is much more liquid than the old currency.
C
Too much currency in an economic system will cause inflation.
D
Too much currency in an economic system will create artificial wealth.

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