Question

1 A bank failure in which the banks assets no longer cover liabilities is called?

		liquidity crises
		imperfect information
		bank run
		solvency crises

2.

The difference between commodity money and fiat money is?

		commodity money requires barter, fiat uses cash
		commodity money has intrinsic value, fiat does not
		commodity money is always gold, fiat is digital
		commodity money was used before central banks existed, fiat used after

Answer 1

1.Ans: solvency crises

Explanation:

Sovency crises occurs when bank's total assets are less than its total  liabilities.

2.Ans: commodity money has intrinsic value, fiat does not

Explanation:

The value of commodity money depend on the material from which it is made. So it has intrinsic value. Gold , silver are the examples of commodity money. On the otherhand , the vlaue of the fiat money does not depend on the material from which it is made. So it has no intrinsic value.