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© 2014 Pearson Canada Inc.#
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
Answer: C
Diff: 1 Type: MC Page Ref: 50 - 51
Skill: Recall
Objective List: 3.3 Show understanding of payments system and illustrate how information
technology has paved the way for e-money, e-banking, and e-commerce
The evolution of the payments system from barter to precious metals, then to fiat money, then
to cheques 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 cheques
Answer: C
Diff: 2 Type: MC Page Ref: 50
Skill: Recall
Objective List: 3.3 Show understanding of payments system and illustrate how information
technology has paved the way for e-money, e-banking, and e-commerce
Compared to cheques, 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
Answer: A
Diff: 1 Type: MC Page Ref: 51
Skill: Recall
Objective List: 3.3 Show understanding of payments system and illustrate how information
technology has paved the way for e-money, e-banking, and e-commerce
Introduction of cheques into the payments system reduced the costs of exchanging goods and
services. Another advantage of cheques 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 cheque are available for use immediately
Answer: A
Diff: 2 Type: MC Page Ref: 51
Skill: Recall
Objective List: 3.3 Show understanding of payments system and illustrate how information
technology has paved the way for e-money, e-banking, and e-commerce