Aplia Homework: Money and the Financial System 2. A history of money At first, it might seem that valuable commodities, such as cattle or lead bars, might be good forms of money. What makes paper money preferable to these alternatives? O It has more intrinsic value than cattle or lead. O It is less likely to be stolen. O It is divisible (unlike cattle) and easily portable (unlike lead bars). Unlike pennies and nickels, which cost more to produce than they are worth, paper money and quarters are: O Useful as a medium of exchange O Examples of token money O A good store of value Cattle can be used as money but can also be slaughtered for food. Cattle are an example of: O Fiat money O Commodity money O Representative money

Aplia Homework: Money and the Financial System 2. A history of money At first, it might seem that valuable commodities, such as cattle or lead bars, might be good forms of money. What makes paper money preferable to these alternatives? O It has more intrinsic value than cattle or lead. O It is less likely to be stolen. O It is divisible (unlike cattle) and easily portable (unlike lead bars). Unlike pennies and nickels, which cost more to produce than they are worth, paper money and quarters are: O Useful as a medium of exchange O Examples of token money O A good store of value Cattle can be used as money but can also be slaughtered for food. Cattle are an example of: O Fiat money O Commodity money O Representative money

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Required Reserve and Excess Reserve Analysis

A required reserve is an amount of cash that banks must keep with themselves, which is certain percentage of the deposits made by their customers. Required reserve is a percentage of the bank's deposits that the respective bank must have on each overnight. The percentage rate is set and determined by the nation’s central bank. It is important to have such funds accumulated to meet its uncertain obligations, sudden liabilities and withdrawals. Required reserve is also known as reserve ratio. Reserve ratio is an important tool to control the money supply.

Question

**CENGAGE | MINDTAP**

**Chapter: Money and the Financial System**

**2. A History of Money**

At first, it might seem that valuable commodities, such as cattle or lead bars, might be good forms of money. What makes paper money preferable to these alternatives?

- O It has more intrinsic value than cattle or lead.
- O It is less likely to be stolen.
- O It’s divisible (unlike cattle) and easily portable (unlike lead bars).

Unlike pennies and nickels, which cost more to produce than they are worth, paper money and quarters are:

- O A good store of value
- O Examples of token money
- O Useful as a medium of exchange

**Cattle can be used as money but can also be slaughtered for food; cattle are an example of:**

- O Representative money
- O Fiat money
- O Commodity money

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