Chapter 13 Homework 1. (Functions of Money) What are the three functions of money?

2. (Ideal Money) What are the six qualities of ideal money?

3. (Origins of Banking) Discuss the various ways in which London goldsmiths functioned as early banks.

4. (Types of Money) Complete each of the following sentences: a. A product that serves both as money and as a commodity is ________________. b. Most coins and paper money circulating in the United States have face values that exceed the value of the materials from which they are made. Therefore, they are forms of _________ __________. c. If the government declares that creditors must accept a form of money as payment for debts, the money becomes ________________________. d. A common unit for measuring the value of every good or service in the economy is known as a(n) _____________________________________.

5. (Fiat Money) Most economists believe that the better fiat money serves as a store of value, the more acceptable it is. What does this statement mean? How could people lose faith in money?

6. (The Value of Money) When the value of money was based on its gold content, new discoveries of gold were frequently followed by periods of inflation. Explain.