The functions of money as a medium of exchange and a measure of value greatly facilitate the exchange of goods and services and the specialization of production. Without the use of money, trade would be reduced to barter, or the direct exchange of one commodity for another. This was the means of exchange used in primitive societies, and bartering is still practiced in some parts of the world today. 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 may sell it for money, which is acceptable in payment for a wide range of other goods or services, thus avoiding the time and effort that would be required to find someone who could make an acceptable trade. Money may thus 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. In ancient times, various articles made of these metals, as well as of iron and bronze, were used as money, while among primitive societies commodities such as shells, beads, elephant tusks, furs, skins, and livestock served as mediums of exchange. The gold coins that circulated in the United States before 1933 were examples of commodity money because the value of the gold contained in the coin was about equal to the value of the coin.
Credit money is paper backed by promises by the issuer, whether a government or a bank, to pay an equivalent value in the standard monetary metal, such as gold or silver. Paper money that is not redeemable in any other type of money and the value of which is fixed merely by government edict is known as fiat money. This is the type of money found today in the United States in the form of both coins and dollar bills.
Credit money becomes fiat money when the issuing government suspends the convertibility of credit money into precious metal. Most fiat money began as credit money, such as the U.S. note known as the greenback which was issued during the American Civil War. Most minor coins in circulation are also a form of fiat money, because the value of the material of which they are made is usually less than their value as money. For example, the amount of nickel in a nickel coin today is less than its 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; the money is then referred to as legal tender. If the supply of paper money is not excessive in relation to the needs of trade and industry and people feel confident that this situation will continue, the currency is likely to be generally acceptable and to be relatively stable in value. If, however, such currency is issued in excessively large volume in order to finance government needs, confidence is destroyed and it rapidly loses value. Such depreciation of the currency is often followed by formal devaluation, or reduction of the official value of the currency, by governmental decree.
The basic money of a country into which other forms of money may be converted and which determines the value of other kinds of money is called the money of redemption or standard money.A. [■]Modern standards have been either commodity standards, in which either gold or silver has been chiefly used as standard money, or fiat standards, consisting of inconvertible currency paper units.B. [■]Most monetary systems of the world at the present time, including those in China and the United States, are fiat systems. C. [■]They do not allow free convertibility of the currency into a metallic standard, and money is given value by government fiat or edict rather than by its nominal gold or silver content. D. [■]Modern systems are also described as managed currencies, because the value of the currency depends to a considerable extent on government management and policies. Internally, the monetary systems of China and the United States contain many elements of managed currency; although gold coinage is no longer permitted, gold may be owned, traded, or used for industrial purposes.

单选题 The word facilitate in Paragraph 1 is closest in meaning to______.
A. help
B. stop
C. change
D. establish

单选题 According to the passage, which of the following is true of barter?
A. Barter does not exist in the world today any more.
B. Barter is much easier than the use of money in exchange.
C. Barter makes the exchange of commodities more complex.
D. Barter was practiced only in very ancient civilizations.

单选题 According to Paragraph 1, why is the use of money as a medium of exchange of commodities helpful for economy?
A. Because money uses less precious metals like gold and silver.
B. Because money spares sellers and buyers the time and effort to find another seller.
C. Because money is considered as a milestone of modern economic life.
D. Because it is very convenient to produce money with natural metals.

单选题 The word primitive in Paragraph 2 is closest in meaning to______.
A. original
B. modern
C. developed
D. recent

单选题 According to Paragraph 2, why did the gold coins used in the United States before 1933 belong to the category of commodity money?
A. Because they were made of the precious metal gold and hence very valuable.
B. Because they could be used to exchange commodities and were called commodity money.
C. Because the value of a coin was the same as the value of the gold in the coin.
D. Because the value of the gold contained in a coin was more than the value of the coin.

单选题 According to the passage, what is the main difference between credit money and fiat money?
A. Credit money is made of precious metals while fiat money is made of paper.
B. Credit money can be converted into precious metals while fiat money cannot.
C. Credit money is more valuable than fiat money because they have different contents.
D. Credit money was circulated in the past while fiat money is used in most modern societies.

单选题 According to the passage, which of the following is an example of fiat money?
A. The gold coins circulated in the U.S. before 1933.
B. The U.S. note issued during the American Civil War.
C. The coins and bills used in the U.S. today.
D. The gold or silver used in primitive societies.

单选题 The word they in Paragraph 4 refers to______.
A. most minor coins
B. the amount of nickel
C. a form of fiat money
D. value as money

单选题 The word excessive in Paragraph 5 is closest in meaning to______.
A. not enough
B. too much
C. too little
D. not legal

单选题 According to Paragraph 4, when people's confidence is destroyed and paper money quickly loses value, which of the following can be inferred?
A. The government will make orders to decrease the value of paper money.
B. The government will try to increase the value of paper money.
C. The government will produce more paper money to regain confidence.
D. The government will propagate to reconstruct people's confidence.

单选题 According to Paragraph 6, which of the following is NOT true of the monetary systems in the United States and China?
A. The monetary systems in both countries are fiat systems.
B. Both countries have some managed elements in their monetary systems.
C. Gold is not allowed to be used for any reasons in the two countries.
D. Both countries forbid currency to be freely converted into gold.

单选题 Look at the four squares [■] that indicate where the following sentence could be added to the passage.
The monetary standard of a nation refers to the type of standard money used in the monetary system.
Where would the sentence best fit?
A. Square Ａ.
B. Square Ｂ.
C. Square Ｃ.
D. Square Ｄ.

问答题 Directions: An introductory sentence for a brief summary of the passage is provided below. Complete the summary by selecting the THREE answer choices that express the most important ideas in the passage. Some sentences do not belong in the summary because they express ideas that are not presented in the passage or are minor ideas in the passage. This question is worth 2 points.
As an indispensable part of modern economy, money has gone through a process of development and a range of types.

· · ·

A. Money as a medium of commodity exchange replaced barter and greatly improved economic development.
B. Usually, money can be made from a wide range of materials ranging from shells, beads, to precious metals and even paper.
C. The evolution of money began with commodity money, then credit money and fiat money with fiat money as the most popular in modern societies today.
D. Since fiat money prevails around the world, barter, commodity money and credit money are not used any more in modern economies.
E. Although money plays an important role in modern economic life it also brings harm to societies.
F. As the most common monetary system around the world today, the fiat system also has some managed elements.