Ex 4. Match each term with the appropriate explanation

intrinsic value, bill of exchange, scarcity, durability, fiat money, nominal value, gold standard, legal tender

1. A form of money in which person has a right by law to pay a debt, and which the creditor must by law accept in settlement of the debt.

2. A monetary system under which the value of the standard unit of currency is by law made equal to a fixed weight of gold.

3. A quality of a unit of money which implies a possibility of its usage over a period of time.

4. A quality of a unit of money which implies the fact that money is a rare good, difficult to come by.

5. The value possessed by a thing because its own nature or the matter of which it is composed.

6. The value of a banknote printed on its face.

7. Paper money or coins of little or no material value in themselves and not convertible into gold but made legal tender by order of the government

8. An order requiring the person to whom it is addressed to pay a sum of money to a specified person or bearer

Ex 5. Answer the questions:

1. What qualities made goods appropriate for serving as money?

2. What does the evolution of money depend on?

3. Why did metallic money replace commodity money?

4. When and where was paper money used first? Why was it abandoned?

5. What is “obligation”? what points were mentioned in these documents?

6. What did the advent of paper fiat money in Europe signify? Why?

7. What is Gold Standard? Why was it come off?

8. What is Gold Exchange Standard?

9. Has the evolution of money stopped? Prove your answer.

Ex 6. Find in the text the words and phrases that mean:

a. qualities units of money must possess to serve the functions of legal tender

b. properties of gold & silver that made them superior to other metals

c. the paper money that had no commodity value and was money only by imperial decree

d. currencies convertible into gold at a fixed price

e. types money that do not have any material form

f. the documents certifying the fact that someone owes money to someone else, used as means of payment

Ex 7. Comment on the following:

- with the intrinsic value of the coins declining, the prices of goods and services began to rise

- this paper money had no commodity value and was money only by imperial decree

- the nation states held gold reserves in central banks to ensure the credibility of their currency

- the evolution of money has not stopped