Question

QUESTION 10

1. Commodity money

   		has value independent of its use as money.
   		has little to no value independent of its use as money.
   		is backed by a valuable commodity such as gold.
   		can be used to purchase commodities, but not services.

2 points   

QUESTION 11

1. If whole tomatoes were money, which of the following functions of money would be the hardest for tomatoes to satisfy?

   		unit of account
   		certificate of gold
   		medium of exchange
   		store of value

2 points   

QUESTION 12

1. When we put a price tag on goods and services, we are using money as a

   		means of payment.
   		unit of account.
   		store of value.
   		medium of exchange.

Answer 1

Answer 10. (c) is backed by a valuable commodity such as gold.

Answer 11. (d) store of value

Answer 12. (d) medium of exchange

Explanation 10. Commodity money was used in ancient times as well as in years around the world wars. In that system, money was issued on the basis of much gold and bullion a country's government had.

Explanation 11. If tomatoes were used as money, then they would rot within some days and thus people's money would be destroyed. Also they would not be comfortable to carry because of the risk of damaging them.

Explanation 12. Money in this question would be used to pay the desired amount on price tag so as to get the good or service in exchange for it.

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