ECO 4223 LUTHER EXAM 1
QUESTIONS WITH CORRECT
ANSWERS
MoneyT-TCORRECTTANSWERScommonlyTacceptedTmediumTofTexchange
·CommonTfunctionsTofTmoneyT-
TCORRECTTANSWERSoTMediumTofTexchangeT(necessary,TbutTnotTsufficient)
oTStoreTofTvalueT(necessary,TbutTtrivial)
oTUnitTofTaccountT(unnecessary)
InsideTMoneyT-
TCORRECTTANSWERS(bankTmoney)TcreatedTwithinTbankingTsystemTandTisTaTclaimTtoTsomeTotherTas
setTthatTisTusedTtoTmakeTpayments.
InsideTMoneyTExampleT-
TCORRECTTANSWERSCheckingTaccount,TbankTowesTyouTthatTmoneyTandTyouTcanTuseTaTdebitTcardTt
oTmakeTaTpayment.
OutsideTMoneyT-
TCORRECTTANSWERS(baseTmoney)TcreatedToutsideTbankingTsystemTandTisTmoneyTusedTforTfinalTse
ttlementTbecauseTit'sTnotTredeemable.
OutsideTMoneyTExampleT-TCORRECTTANSWERS$100TbillT(cashTisTnotTredeemable)
CommodityTMoneyT-
TCORRECTTANSWERSisTaTgoodTthatTisTusedTasTmoney.THistoricalTexamplesTincludeTgold,TsilverTandTs
alt.
, FiatTMoneyT-
TCORRECTTANSWERSisTanTitemTthatThasTnoTuseTapartTfromTbeingTaTcommonlyTacceptedTmediumTo
fTexchange.TModernTexamplesTtheTdollarTandTeuros.
WhyTDoTWeTUseTMoney?T(2Tviews)T-TCORRECTTANSWERS1)THistoricalTMaterialistTViewT
2)TEconomicTView
HistoricalTMaterialistTViewT-TCORRECTTANSWERS(AnthropologistTfavor)TmoneyTisTaTrevenue-
raisingTtechnologyTintroducedTbyTgovernmentsTtoTcollectTtaxesTmoreTeffectively.
EconomicTViewT-
TCORRECTTANSWERS(EconomistsTfavor)TmoneyTisTaTproductiveTtechnologyTthatTreducesTtransactio
nTcostsThence,TfacilitatesTexchange.
StateTTheoryTofTMoneyT-
TCORRECTTANSWERSorTchartalism,TmaintainsTthatTmoneyTwasTcreatedTbyTtheTgovernment.
ToolsTgovernmentsTuseTtoTdetermineTmediumTofTexchangeT(4)T-
TCORRECTTANSWERSoTPublicTreceivability
oTLegalTtenderTstatus
oTForcedTmoneyTlaws
oTBanTalternatives
PublicTReceivabilityT-
TCORRECTTANSWERStheTgovernmentTcommitsTtoTacceptingTtaxesTandTmakingTpurchasesTwithTit.
LegalTtenderTstatusT-
TCORRECTTANSWERScourtsTareTrequiredTtoTrecognizeTtheTitemTasTsatisfactoryTpaymentTofTanyTdeb
t,TandTsettleTdisputesTbyTrequiringTpaymentTinTtheTitem.
QUESTIONS WITH CORRECT
ANSWERS
MoneyT-TCORRECTTANSWERScommonlyTacceptedTmediumTofTexchange
·CommonTfunctionsTofTmoneyT-
TCORRECTTANSWERSoTMediumTofTexchangeT(necessary,TbutTnotTsufficient)
oTStoreTofTvalueT(necessary,TbutTtrivial)
oTUnitTofTaccountT(unnecessary)
InsideTMoneyT-
TCORRECTTANSWERS(bankTmoney)TcreatedTwithinTbankingTsystemTandTisTaTclaimTtoTsomeTotherTas
setTthatTisTusedTtoTmakeTpayments.
InsideTMoneyTExampleT-
TCORRECTTANSWERSCheckingTaccount,TbankTowesTyouTthatTmoneyTandTyouTcanTuseTaTdebitTcardTt
oTmakeTaTpayment.
OutsideTMoneyT-
TCORRECTTANSWERS(baseTmoney)TcreatedToutsideTbankingTsystemTandTisTmoneyTusedTforTfinalTse
ttlementTbecauseTit'sTnotTredeemable.
OutsideTMoneyTExampleT-TCORRECTTANSWERS$100TbillT(cashTisTnotTredeemable)
CommodityTMoneyT-
TCORRECTTANSWERSisTaTgoodTthatTisTusedTasTmoney.THistoricalTexamplesTincludeTgold,TsilverTandTs
alt.
, FiatTMoneyT-
TCORRECTTANSWERSisTanTitemTthatThasTnoTuseTapartTfromTbeingTaTcommonlyTacceptedTmediumTo
fTexchange.TModernTexamplesTtheTdollarTandTeuros.
WhyTDoTWeTUseTMoney?T(2Tviews)T-TCORRECTTANSWERS1)THistoricalTMaterialistTViewT
2)TEconomicTView
HistoricalTMaterialistTViewT-TCORRECTTANSWERS(AnthropologistTfavor)TmoneyTisTaTrevenue-
raisingTtechnologyTintroducedTbyTgovernmentsTtoTcollectTtaxesTmoreTeffectively.
EconomicTViewT-
TCORRECTTANSWERS(EconomistsTfavor)TmoneyTisTaTproductiveTtechnologyTthatTreducesTtransactio
nTcostsThence,TfacilitatesTexchange.
StateTTheoryTofTMoneyT-
TCORRECTTANSWERSorTchartalism,TmaintainsTthatTmoneyTwasTcreatedTbyTtheTgovernment.
ToolsTgovernmentsTuseTtoTdetermineTmediumTofTexchangeT(4)T-
TCORRECTTANSWERSoTPublicTreceivability
oTLegalTtenderTstatus
oTForcedTmoneyTlaws
oTBanTalternatives
PublicTReceivabilityT-
TCORRECTTANSWERStheTgovernmentTcommitsTtoTacceptingTtaxesTandTmakingTpurchasesTwithTit.
LegalTtenderTstatusT-
TCORRECTTANSWERScourtsTareTrequiredTtoTrecognizeTtheTitemTasTsatisfactoryTpaymentTofTanyTdeb
t,TandTsettleTdisputesTbyTrequiringTpaymentTinTtheTitem.
