Whatever Happened to Penny Candy?

Quiz #3

1. Define the following:

Welfare program – A government program for giving away money or

goods, usually to poor people.

Subsidy – A government program for giving tax money away, usually to

rich people or large corporations.

Counterfeiting – To make something that is fake or phony.

Debasing – Reducing the value of a coin by reducing the amount of

precious metal in it.

Inflation – An increase in the amount of money causes the money to lose

value so prices rise.

2. Which statement is true? Statement A is true.

A. Inflation causes rising prices

B. Inflation is rising prices.

3. Why does a government tax its citizens?

Governments tax to provide the goods and services that governments deem
necessary.

4. Prior to printing presses, how did the Roman government counterfeit?

The Roman government counterfeited by clipping coins, meaning they shaved

the edges of the coin, then used the shavings to mint, or make, new debased
coins. Also, the government would melt down the precious metal coins, add in
base metal, and re-mint the debased coins so there were more in circulation.

Bonus: What is Gresham's law?

Bad money drives good money out of circulation.