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First1.What are the six characteristics of money? Explain how the U.S. dollar has those sixcharacteristics.1.Acceptability – the dollar is acceptable as payment for goods and services and settlementof debts.2.Divisibility – money must be divisible into small units to facilitate exchanges. The dollaris divisible into pennies, nickels, dimes, and quarters.3.Portability – money must be easily transported. The dollar is lightweight and foldseasily.4.Durability– dollars last an average of eighteen months and can be folded thousands oftimes.5.Stability – the dollar is reasonably stable. A dollar will buy a dollar's worth of goods andservices today or next week.6.Difficulty of counterfeiting– the dollar is extremely difficult to counterfeit because ofthe paper and ink used in printing.2.What is the difference between a credit card and a debit card? Why are credit cardsconsiderably more popular with U.S. consumers?A credit card allows consumers to make purchases and pay for them over time at a specifiedinterest rate. With a debit card, the amount of a purchase is immediately deducted from theconsumer's account, if enough funds are available. Credit cards are considerably more popularwith U.S consumers because they allow instant financing of purchases and are generallyaccepted around the world. Debit cards, however, are beginning to grow in popularity because oftheir convenience.3.Discuss the four economic goals the Federal Reserve must try to achieve with itsmonetary policy.
4.Explain how the Federal Reserve uses open market operations to expand andcontract the money supply.