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AP Macroeconomics: Money Exam Questions and Answers 100% Pass

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  • AP Macroeconomics
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  • AP Macroeconomics

AP Macroeconomics: Money Exam Questions and Answers 100% Pass money - Any asset that can be exchanged easily for a good or service what functions does money serve in an economy? - - store of value - medium of exchange - unit of measure store of value - money holds value over time medium of e...

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  • January 8, 2025
  • 7
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers
  • AP Macroeconomics
  • AP Macroeconomics
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AP Macroeconomics: Money Exam
Questions and Answers 100% Pass

money - ✔✔Any asset that can be exchanged easily for a good or service


what functions does money serve in an economy? - ✔✔- store of value


- medium of exchange


- unit of measure


store of value - ✔✔money holds value over time


medium of exchange - ✔✔money can be exchanged for goods and services


- prevents the double coincidence of wants that occurs from bartering


- money holds purchasing power


unit of measure - ✔✔money can be counted and its value can be recorded easily


double coincidence of wants - ✔✔- money eliminates this issue by eliminating the need for barter: a

system of exchange where two parties exchange a good or service without the use of money


- This co-incidence depends on both parties wanting the same thing and that each is of equivalent value

to the other


- the use of money gets rid of this need and as a result makes for a much more smoothly operating

economy


what are the different types of money? - ✔✔- commodity money



Emily Charlene © 2025, All Rights Reserved.

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- commodity-backed money


- fiat money


commodity money - ✔✔ex. gold, livestock, cigarettes, etc...


commodity-backed money - ✔✔ex. Gold standard - every dollar in circulation has an equivalent value in

gold


fiat money - ✔✔money that is backed by the issuer (bank of Canada) - paper money


- money has no intrinsic value since it's only paper


how do we value money in the economy? - ✔✔- price of money relative to goods


- price of money relative to time


- price of money relative to foreign currency


price of money relative to goods - ✔✔purchasing power


price of money relative to time - ✔✔interest rates (nominal)


price of money relative to foreign currency - ✔✔exchange rates


increase in money supply = - ✔✔- inflation (price level increases and decreases purchasing power)


- decreased interest rate


- decreased exchange rate


decrease in money supply = - ✔✔- deflation (price level falls and increases purchasing power)


- increased interest rate


- increased exchange rate




Emily Charlene © 2025, All Rights Reserved.

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