Text 1 Money and its Functions

1. Do the following statements agree with the information given in the text Money and its Functions?

Use TRUE if the statement agrees with the information

FALSE if the statement contradicts the information

NOT GIVEN if there is no information on this

1) Money also functions as a unit of account, providing a common measure of value of goods and services.

2) As the extent of specialisation increases, the barter system proves very inefficient and frustrating.

3) The great disadvantage of holding wealth in the form of money has become very apparent in recent years – during periods of inflation its exchange value falls.

4) Mainly token money served as money in the nineteenth century.

5) Bank deposits are the total amount of money that customers pay into a particular bank, and the bank owns this money.

1. Complete the extract with the most suitable word.

Money is a good that is widely used and accepted in _____1_____ involving the transfer of goods and services from one person to another. What we consider _____2_____ today includes not only currency, but also travelers checks, demand deposits and other checkable _____3_____ such as negotiable orders of withdrawal.

Money _____4_____ three distinct functions. First, it serves as a _____5 _____ in conducting transactions. It is much more efficient in facilitating the transfer of goods and services than a barter system would be. The second function of money is that it serves as a unit of measurement. Whether or not any transactions take place, the _____6_____ of goods and services is measured in units of money. The unit of measurement within each country is the _____7_____ of that country. The unit of measurement in _____8_____ transactions is quite often the American dollar. Finally, money can be used as a _____9_____. During periods of rapidly rising prices, however, it does not serve this function well.

1. Complete each sentence with the correct ending, A-H, below.

1) Without money, all transactions would have to be conducted by barter,

2) As a store of value money is not unique and even is not the best one because

3) Knowing the value or price of a good, in terms of money, enables both the supplier and the purchaser of the good to make decisions about

4) The essential condition of the survival of token money is

5) Some people aren’t very sensible with their money and

A. it holds its value.

B. the restriction of the right to supply it.

C. it can subsequently be used to buy things we do wish to consume.

D. they waste it on useless things.

E. people purchase it from banks, paying for it by check.

F. it depreciates with inflation.

G. which involves direct exchange of one good or service for another.

H. how much of the good to supply and how much of the good to purchase.