NAME: JOMARIE S.

LAGGUI DATE: 09/21/2021

YR./CRSE/SEC.: 3 BS Accountancy-A FINANCIAL MARKETS AND INSTITUTIONS

Chapter 3 – Essay Questions

1) Where does the value of fiat money come from if it is not backed by gold or
silver?
The value of fiat money is defined not by the value of the underlying
commodity but by the link between supply and demand and also by the stability of
the issuing government. The bulk of paper currencies, including US dollars, euro
currencies and other major world currencies, is fiat. Fiat money is any legal tender
that is not backed by a physical commodity such as gold or silver, and whose
material has no intrinsic worth other than that of a currency. Fiat money's value is
determined by the government that issued it. It has been designed to be legal
tender by the government. Fiat money retains its value due to the stability of the
government and economy to which it belongs, as well as the central bank's
competent regulation of money supply.

2) Give 3 advantages of using checks to pay for goods and services instead of
physical coins and currency.

a) When settling large-scale transactions, it is more convenient to carry checks

rather than money and currencies.
b) When you carry checks instead of cash, you're less likely to be robbed since
checks are less appealing to thieves because they can't be cashed by just
anyone.
c) When you pay using checks rather than cash, you can simply track your
payments. When you write checks, all of the information you'll need to make a
payment is written on the check as well. You can easily track your spending,
who you paid, and so on.
3) Write about transaction that you did using electronic money/electronic
payment. Give 2 advantages and 1 disadvantage of the availability of electronic
money to pay for goods and services instead of physical coins and currency.
You give advantages and disadvantages that affect you personally or that of
economy.

PayMaya was one of the electronic payment transactions I completed. PayMaya

is a free mobile wallet program that meets the needs of customers who want to
conduct secure and seamless financial transactions using mobile phone. PayMaya
can be used to buy load, send money, make bank transfers, pay bills, and buy
products in stores, but I've just used it to buy, send, and receive load. Because I
exclusively use mobile data in my online class, my Mom would frequently send me my
load through my PayMaya account. If my PayMaya balance runs low, I top up my
wallet at a 7-Eleven convenience store with a PayMaya loading station. For me, the
benefits of PayMaya are that 1) it has become easier and faster for me to buy load
and mobile data during my online class, and 2) I no longer need to ensure that I have
money on hand to buy load because my PayMaya wallet secures me as long as it has
enough balance that I can buy load without delay and my online class is not
jeopardized. However, the only negative for me is that 1) there is a chance that my
account would be hacked by someone, thus I am concerned about its security.