When store owners quote prices in terms of dollars, money is acting as a __________.

A.)

store of value

B.)

unit of account

C.)

commodity

D.)

medium of exchange

Which of the following describes what happened to the gold trade as the use of gold as currency became more standardized?

A.)

Banks figured out that they could print more money than gold that they had in their vaults.

B.)

People began to write checks instead of actually transferring gold.

C.)

Traders faced a double coincidence of wants.

D.)

Certain commodities became accepted as forms of exchange.

Which of the following can be described aswhen a bank holds a part of its gold and loans out the rest?

A.)

Fiat currency

B.)

Deposit account

C.)

Fractional reserve

D.)

Fiduciary money

Which answer below explains why some might have favored the old banking system?

A.)

The value of notes from unknown banks was unclear.

B.)

All of the account holders at a bank could c r e a t e a run by asking to withdraw their funds at the same time.

C.)

Currency traders could make a lot of money by exchanging it between cities.

D.)

Prices were uncertain in trading over long distances.

Which of the following describes a way that central banks strengthened the value of currency?

A.)

Over time, the banking system became less reliant on the gold standard.

B.)

Traders made a living by exchanging currency between cities.

C.)

Banks lent out more money than is kept in reserves.

D.)

People deposited paper money instead of gold in banks.

How does the Federal Reserve prevent runs on banks?

A.)

By guaranteeing people's deposits

B.)

By acting as a lender of last resort to member banks

C.)

It doesn't; Banks need to establish good reputations on their own.

D.)

By printing more money if necessary