5) Money that has no intrinsic value of its own and is used because of governmen

Question

5) Money that has no intrinsic value of its own and is used because of government 2pts) decree is: used only in countries that don't have a central bank. inferior to a commodity money, according to the text. a fiat money a full-bodied money a commodity money 6) Putting all your loose change in a jar to use when you go on vacation involves which of the (2pts) following functions of money? medium of exchange store of value unit of account all the above none of the above 7) The M1 measure of the money supply includes all of the following (pts) except currency savings deposits demand deposits other checkable deposits

Explanation / Answer

5. The correct answer is: c) Fiat money

Reason: By definition, it is the fiat money that has no intrinsic value but is used because of government regulation. It has its value only because of the government decree.

6. The correct answer is: B) store of value.

Reason: Money is the most common store of value. The store of value function of money implies that money can be stored(saved), retrieved and exchanged at a later time.

7.The correct answer is: d) Other checkable deposits.

Reason: By definition, M1 includes cash and checking deposits.

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