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Read the text and choose the right answers (a, b, c) to the questions.

MONEY AS A MEDIUM OF EXCHANGE

Money is a medium of exchange in the economy. It is a means of payment for
goods and services and in settlement of debts. Money is also a standard of value for
measuring the relative economic worth of different goods and services. The price of
the commodity is the number of units of money required to buy this commodity. The
main functions of money are a medium of exchange and the measure of value.
Without the use of money trade would be reduced to barter, that is to direct exchange
of one kind of goods for another. Barter trade was the means used by primitive people
and it is still practiced in some parts of the world. In a barter economy, a person
having something to trade must find another who wants it and has something
acceptable to offer in exchange. In a money economy, the owner of a commodity can
sell it for money and buy anything he wants for his money. So money may be
regarded as a keystone of modern economic life.
The most important types of money are commodity money, credit money and fiat
money. The value of commodity money is about equal to the value of the material
contained in it. The principal materials used for this type of money have been gold,
silver, and copper. Credit money are documents with promises by the issuer to pay an
equivalent value in the standard money metal. Fiat money is paper money the value of
which is fixed by the government. Most minor coins in circulation are also fiat
money, because the value of the material of which they are made is usually less than
their value as money.
Both the fiat and credit forms of money are generally made acceptable through a
government decree that all creditors must take the money in settlement of debts. Fiat
money in the form of banknotes is referred to as a legal tender.
Banknotes are usually made from special high-quality paper, with watermarks,
metallic strips, and other features against forgery. Highly sophisticated printing
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techniques are used and banknote designs have elements that are hard to copy. Fronts
and backs of notes are printed separately, and serial numbers are added later.
1. What is commodity money?
a) coins
b) banknotes
c) coins and banknotes
2. What would happen to trade without money?
a) it would be easier to trade
b) the nation would prosper
c) it would turn into barter
3. What is credit money?
a) banknotes
b) coins
c) documents
4. What is money usually made of?
a) silver
b) silver, copper, gold
c) gold, silver
5. What is money?
a) coins
b) banknotes
c) a medium of exchange
6. What is the main function of money?
a) a standard of value
b) a medium of exchange
c) token money
7. Are fronts and backs of money printed separately?
a) Yes, always
b) Yes, sometimes
c) No, never
8. Why is the process of making money so difficult?
a) to make it impossible to forge money
b) to make money a medium of exchange
c) to make money valuable
9. What is the main function of money?
a) a store of wealth and medium of exchange
b) a store of wealth and standard of value
c) a medium of exchange and standard of value
10. Who used barter trade?
a) modern societies
b) primitive people
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c) people in prehistoric times