Question : 1) The payments system is A) the method of conducting transactions : 1373645

1) The payments system is

A) the method of conducting transactions in the economy.

B) used by union officials to set salary caps.

C) an illegal method of rewarding contracts.

D) used by your employer to determine salary increases.

2) As the payments system evolves from barter to a monetary system,

A) commodity money is likely to precede the use of paper currency.

B) transaction costs increase.

C) the number of prices that need to be calculated increase rather dramatically.

D) specialization decreases.

3) A disadvantage of ________ is that it is very heavy and hard to transport from one place to another.

A) commodity money

B) fiat money

C) electronic money

D) paper money

4) Paper currency that has been declared legal tender but is not convertible into coins or precious metals is called ________ money.

A) commodity

B) fiat

C) electronic

D) funny

5) When paper currency is decreed by governments as legal tender, legally it must be ________.

A) paper currency backed by gold

B) a precious metal such as gold or silver

C) accepted as payment for debts

D) convertible into an electronic payment

6) The evolution of the payments system from barter to precious metals, then to fiat money, then to checks can best be understood as a consequence of the fact that

A) paper is more costly to produce than precious metals.

B) precious metals were not generally acceptable.

C) precious metals were difficult to carry and transport.

D) paper money is less accepted than checks.

7) Compared to checks, paper currency and coins have the major drawbacks that they

A) are easily stolen.

B) are hard to counterfeit.

C) are not the most liquid assets.

D) must be backed by gold.

8) Introduction of checks into the payments system reduced the costs of exchanging goods and services.  Another advantage of checks is that

A) they provide convenient receipts for purchases.

B) they can never be stolen.

C) they are more widely accepted than currency.

D) the funds from a deposited check are available for use immediately.

9) The evolution of the payments system from barter to precious metals, then to fiat money, then to checks can best be understood as a consequence of

A) government regulations designed to improve the efficiency of the payments system.

B) government regulations designed to promote the safety of the payments system.

C) innovations that reduced the costs of exchanging goods and services.

D) competition among firms to make it easier for customers to purchase their products.

10) Compared to an electronic payments system, a payments system based on checks has the major drawback that

A) checks are less costly to process.

B) checks take longer to process, meaning that it may take several days before the depositor can get her cash.

C) fraud may be more difficult to commit when paper receipts are eliminated.

D) legal liability is more clearly defined.