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FM Practice Question

The document consists of a series of questions related to the concepts of money and the barter system, including multiple choice, matching, short answer, and long answer questions. It addresses problems of the barter system, types of money, functions of money, and the evolution of money. Additionally, it prompts for explanations of specific concepts such as representative money, plastic money, and cryptocurrency.

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rejithasatish3
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3 views2 pages

FM Practice Question

The document consists of a series of questions related to the concepts of money and the barter system, including multiple choice, matching, short answer, and long answer questions. It addresses problems of the barter system, types of money, functions of money, and the evolution of money. Additionally, it prompts for explanations of specific concepts such as representative money, plastic money, and cryptocurrency.

Uploaded by

rejithasatish3
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Q.

1 Choose the correct answer (1x5=5)


Q1. Which problem of the barter system is highlighted when a farmer wants shoes but the
shoemaker doesn’t need wheat? (1)
(a) Lack of store of value
(b) Lack of divisibility
(c) Lack of double coincidence of wants
(d) Lack of portability

Q2. Money whose value comes from a government order and not from intrinsic value is called:
(1)
(a) Commodity money
(b) Fiat money
(c) Representative money
(d) Metallic money

Q3. Which of these is not a function of money? (1)


(a) Medium of exchange
(b) Store of value
(c) Double coincidence of wants
(d) Unit of account

Q4. Cowry shells, beads, and cattle used in ancient trade are examples of: (1)
(a) Fiat money
(b) Digital currency
(c) Commodity money
(d) Representative money

Q5. The main reason metallic coins replaced commodity money like grain was: (1)
(a) Grain could not be eaten
(b) Coins had standard weight, durability, and were easier to carry
(c) Commodity money was illegal
(d) Coins were cheaper to produce than grain
Q.2 Match the Following (1x5=5)
1. Medium of Exchange - (A) Money made of precious metals like gold & silver with intrinsic
value
2. Barter System - B) Using money to settle deferred payments like loans
3. Standard of Deferred Payment - C) Direct exchange of goods/services without money
4. Metallic Money - (D) Money acts as an intermediary to avoid double coincidence
5. Liquidity - E) Ease with which an asset can be converted to cash without loss of value

Q.3 Short Answer Questions (2x2=4)


Q1. Give two reasons why gold and silver were preferred over iron as money in ancient times.
(2)
Q2. Distinguish between “Money as a Medium of Exchange” and “Money as a Unit of Account”.
(2)
Q.4 Long Answer Questions (3x2=6)
Q1. Explain any three limitations of the barter system with examples. (3)

Q2. Trace the evolution of money from commodity money to digital currency in 5 stages.
OR
Write short notes on:
a) Representative Money
b) Plastic Money
c) Cryptocurrency (1+1+1=3)

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