Chapter 6: Money & Banking Questions
And Answers.
Compare and Contrast - What is one disadvantage of bartering over using currency to purchase goods?
(p. 233) - Answer One disadvantage is the absence of a proper and convenient means of storing wealth
or value.
Explain - Why do objects used as money need to be in limited supply? (p. 233) - Answer Objects used as
money need to be in limited supply in order to maintain its value.
Define - What does it mean to say that money is an acceptable form of payment? (p. 233) - Answer A
person that accepts money as a form of payment can use it for something else.
List - What are the six characteristics of money? (p. 233) - Answer The six characteristics of money
include: durability; portability; divisibility; uniformity; limited supply; acceptability.
Apply Concepts - If you write your friend an IOU for a loan of twenty dollars, what type of money have
you given her? (p. 233) - Answer You have given her Representative Money.
Summarize - What did the federalists, led by Alexander Hamilton, believe about the new nation's system
of banking? (p. 240) - Answer They believed that a centralized banking system was key to promoting
industry and trade.
Identify Cause & Effect - What was one effect of President Jackson's veto of the Second Bank of the
United States?
(p. 240) - Answer The Free Banking Era begins.
Describe - What was the gold standard? (p. 240) - Answer The gold standard was a monetary system in
which paper money and coins had the value of certain amounts of gold.
Summarize - What were the effects of the government policies that limited people's ability to redeem
paper money for gold during the Depression? (p. 240) - Answer There was an increase in gold value and
decrease in the value of the dollar.
And Answers.
Compare and Contrast - What is one disadvantage of bartering over using currency to purchase goods?
(p. 233) - Answer One disadvantage is the absence of a proper and convenient means of storing wealth
or value.
Explain - Why do objects used as money need to be in limited supply? (p. 233) - Answer Objects used as
money need to be in limited supply in order to maintain its value.
Define - What does it mean to say that money is an acceptable form of payment? (p. 233) - Answer A
person that accepts money as a form of payment can use it for something else.
List - What are the six characteristics of money? (p. 233) - Answer The six characteristics of money
include: durability; portability; divisibility; uniformity; limited supply; acceptability.
Apply Concepts - If you write your friend an IOU for a loan of twenty dollars, what type of money have
you given her? (p. 233) - Answer You have given her Representative Money.
Summarize - What did the federalists, led by Alexander Hamilton, believe about the new nation's system
of banking? (p. 240) - Answer They believed that a centralized banking system was key to promoting
industry and trade.
Identify Cause & Effect - What was one effect of President Jackson's veto of the Second Bank of the
United States?
(p. 240) - Answer The Free Banking Era begins.
Describe - What was the gold standard? (p. 240) - Answer The gold standard was a monetary system in
which paper money and coins had the value of certain amounts of gold.
Summarize - What were the effects of the government policies that limited people's ability to redeem
paper money for gold during the Depression? (p. 240) - Answer There was an increase in gold value and
decrease in the value of the dollar.
