Question 1
To ensure that paper money will be accepted, the U.S. government implicitly promises the public that
◦ it will not print money so fast that it loses its value.
◦ it will not change the rate at which the dollar is exchanged for other currencies.
◦ it will always remain the strongest currency of all industrialized nations.
◦ the U.S. monetary system will always be backed by a precious metal.
Question 2
Currency debasement occurs when
◦ the value of money falls as a result of a rapid increase in its supply.
◦ the government requires that a certain form of money must be accepted in settlement of debts.
◦ items are designated as money that are intrinsically worthless.
◦ items are used as money that also have intrinsic value in some other use.