Money in the European Middle Ages
1 The money of the European Middle Ages (roughly 450–1450 ᴄ.ᴇ.) was in many ways profoundly different from what we think of as money today. A cash transaction always involved a precious metal, usually silver, although gold coinage was introduced in the course of the thirteenth century. In this sense, the use of cash was also a form of barter (trade of one good for another). The distinctive feature of the precious metal was that a small quantity was enormously valuable—a single ounce was worth a week’s wages for even a skilled worker—and its value was relatively stable, in contrast with that of agricultural goods, which were subject to spoilage, or of manufactured goods, which varied in quality. The actual value of the coin depended on its precious metal content, which in turn reflected the coin’s physical size, and the purity of the precious metal, since it was always alloyed (mixed) to some degree with a cheaper metal. Minted coin—coin manufactured in official facilities called mints—provided a relatively stable medium of exchange by providing standardized quantities and purity of silver, backed by the reputation of the issuing authority whose name and symbol were imprinted on the coin. The imprinted image also helped verify whether the coin had been tampered with by removing metal from any of its surfaces.
2 Whereas modern money is almost invariably issued only by national governments, the right to coin money in the Middle Ages was widely dispersed. In France, there were two major royal coinages, the denier of Paris and the denier of Tours, in addition to a dozen or so important regional coinages, and a multitude of local mints under the authority of minor lords. Only in England was the monarchy successful in establishing an exclusive right to mint coin, and from the thirteenth century onward it had a unique reputation for the quality of its coinage. Whereas today foreign exchange is only a matter for international travelers, in the Middle Ages even a homebody might encounter a range of different moneys and would need to know their relative values.
3 █ Then as now, exchange rates were not stable. █ Today, the value of a currency represents a complex market reaction to economic circumstances in the country that issues the money. █ In the Middle Ages, fluctuation was in a large measure a result of changes in the coinage itself. █ From time to time, rulers succumbed to the temptation to debase their coinage. By melting down old coins and reissuing them in a smaller size or with a higher alloy content, they could increase the amount of money they had at their disposal. Of course, this quickly caused the market to set a lower value on the coin, sometimes with serious economic consequences. People needed to keep an eye on any change in the coinage, as it directly affected the value of the money they used. Fluctuations in the availability of silver itself also affected the value of money.
4 Overall, the tendency, then as now, was inflationary—tending to decrease the purchasing power of money. The actual rate of inflation was extremely low by modern standards. Over the course of the thirteenth century, the average rate was something like 0.5 percent per year, well below the 2 to 4 percent that many economists consider healthy in Western economies today. For contemporaries , the actual rate of inflation was obscured by dramatic short-term fluctuations from one year to the next. These fluctuations were the result of the instability of agricultural production in a subsistence economy highly sensitive to the cost of produce. A good summer might bring a bountiful harvest, lowering the price of produce, while a rainy growing season, crop blight, or disease among the livestock could decimate output, making produce significantly more expensive. A twofold rise or fall in the price of grain from one year to the next was not uncommon. Most of the population was obliged to spend an enormous proportion of their annual income on food, particularly grains and derivative products like bread, and as food prices rose, they needed to demand proportionally more money for their work, leading to a domino effect that affected prices throughout the economy.
1
Which of the sentences below best expresses the essential information in the highlighted sentence in the passage? Incorrect choices change the meaning in important ways or leave out essential information.
A)Precious metal was more highly valued by skilled workers than agricultural or manufactured goods, which varied in quality and availability.
B)One distinctive feature of precious metal was that, despite variations in quality, it was highly valued inboth the agricultural and manufacturing industries.
C)The high value of only a small amount of precious metal set it apart from agricultural and manufactured goods, whose value was relatively unstable.
D)One advantage of precious metal was that a small amount could be used by a skilled worker to purchase agricultural and manufactured goods.
2
1 The money of the European Middle Ages (roughly 450–1450 ᴄ.ᴇ.) was in many ways profoundly different from what we think of as money today. A cash transaction always involved a precious metal, usually silver, although gold coinage was introduced in the course of the thirteenth century. In this sense, the use of cash was also a form of barter (trade of one good for another). The distinctive feature of the precious metal was that a small quantity was enormously valuable—a single ounce was worth a week’s wages for even a skilled worker—and its value was relatively stable, in contrast with that of agricultural goods, which were subject to spoilage, or of manufactured goods, which varied in quality. The actual value of the coin depended on its precious metal content, which in turn reflected the coin’s physical size, and the purity of the precious metal, since it was always alloyed (mixed) to some degree with a cheaper metal. Minted coin—coin manufactured in official facilities called mints—provided a relatively stable medium of exchange by providing standardized quantities and purity of silver, backed by the reputation of the issuing authority whose name and symbol were imprinted on the coin. The imprinted image also helped verify whether the coin had been tampered with by removing metal from any of its surfaces.
In paragraph 1, all of the following are mentioned as advantages of minted coins EXCEPT:
A)Minted coins were made of an alloy known for its durability.
B)Minted coins contained a consistent amount of precious metal.
C)Minted coins contained a consistent proportion of precious metal to cheaper metal. D)Minted coins would show signs of any attempt to remove their precious metal.
3
In paragraph 2, why does the author provide information about coinages in France?
A)To explain why modern money came to be coined only by national governments
B)To illustrate that the right to coin money in the Middle Ages was generally not exclusive within a country
C)To contrast the coin minting system in France with systems in other parts of Europe in the Middle Ages
D)To show what could happen if a government did not establish the exclusive right to mint coins
4
2 Whereas modern money is almost invariably issued only by national governments, the right to coin money in the Middle Ages was widely dispersed. In France, there were two major royal coinages, the denier of Paris and the denier of Tours, in addition to a dozen or so important regional coinages, and a multitude of local mints under the authority of minor lords. Only in England was the monarchy successful in establishing an exclusive right to mint coin, and from the thirteenth century onward it had a unique reputation for the quality of its coinage. Whereas today foreign exchange is only a matter for international travelers, in the Middle Ages even a homebody might encounter a range of different moneys and would need to know their relative values.
According to paragraph 2, even people who stayed close to home during the Middle Ages had to deal with a variety of currencies because
A)foreign exchange services were not yet widely available
B)most countries had many regional and local mints producing their own distinct coinages
C)the high reputations of some currencies caused their use to quickly spread to other countries
D)the increasing popularity of international travel caused the circulation of many different currencies whose value was unknown
5
3 █ Then as now, exchange rates were not stable. █ Today, the value of a currency represents a complex market reaction to economic circumstances in the country that issues the money. █ In the Middle Ages, fluctuation was in a large measure a result of changes in the coinage itself. █ From time to time, rulers succumbed to the temptation to debase their coinage. By melting down old coins and reissuing them in a smaller size or with a higher alloy content, they could increase the amount of money they had at their disposal. Of course, this quickly caused the market to set a lower value on the coin, sometimes with serious economic consequences. People needed to keep an eye on any change in the coinage, as it directly affected the value of the money they used. Fluctuations in the availability of silver itself also affected the value of money.
According to paragraph 3, fluctuations in exchange rates in the
Middle Ages were mainly caused by which TWO of the following? To receive credit, you must select TWO answer choices.
A)Changes in the economic circumstances in the country issuing the coins
B)Changes in the age of coins in circulation
C)Changes to the size or alloy content of coins made by rulers
D)Changes in the availability of precious metals
6
4 Overall, the tendency, then as now, was inflationary—tending to decrease the purchasing power of money. The actual rate of inflation was extremely low by modern standards. Over the course of the thirteenth century, the average rate was something like 0.5 percent per year, well below the 2 to 4 percent that many economists consider healthy in Western economies today. For contemporaries , the actual rate of inflation was obscured by dramatic short-term fluctuations from one year to the next. These fluctuations were the result of the instability of agricultural production in a subsistence economy highly sensitive to the cost of produce. A good summer might bring a bountiful harvest, lowering the price of produce, while a rainy growing season, crop blight, or disease among the livestock could decimate output, making produce significantly more expensive. A twofold rise or fall in the price of grain from one year to the next was not uncommon. Most of the population was obliged to spend an enormous proportion of their annual income on food, particularly grains and derivative products like bread, and as food prices rose, they needed to demand proportionally more money for their work, leading to a domino effect that affected prices throughout the economy.
The word “ contemporaries ” in the passage is closest in meaning to
A)people who are living today
B)people who earned low wages
C)people who study the period
D)people who were living at that time
7
4 Overall, the tendency, then as now, was inflationary—tending to decrease the purchasing power of money. The actual rate of inflation was extremely low by modern standards. Over the course of the thirteenth century, the average rate was something like 0.5 percent per year, well below the 2 to 4 percent that many economists consider healthy in Western economies today. For contemporaries , the actual rate of inflation was obscured by dramatic short-term fluctuations from one year to the next. These fluctuations were the result of the instability of agricultural production in a subsistence economy highly sensitive to the cost of produce. A good summer might bring a bountiful harvest, lowering the price of produce, while a rainy growing season, crop blight, or disease among the livestock could decimate output, making produce significantly more expensive. A twofold rise or fall in the price of grain from one year to the next was not uncommon. Most of the population was obliged to spend an enormous proportion of their annual income on food, particularly grains and derivative products like bread, and as food prices rose, they needed to demand proportionally more money for their work, leading to a domino effect that affected prices throughout the economy.
According to paragraph 4, which TWO of the following were true of the value of money in the Middle Ages compared to its value today? To receive credit, you must select TWO answer choices.
A)Unlike today, inflation in the Middle Ages was caused by purchases made in anticipation of shortages.
B)Similar to today, money tended to lose its value over time in the Middle Ages.
C)Compared to today, inflation rates in the Middle Ages were higher on average.
D)Compared to today, the value of money fluctuated more frequently in the Middle Ages.
8
4 Overall, the tendency, then as now, was inflationary—tending to decrease the purchasing power of money. The actual rate of inflation was extremely low by modern standards. Over the course of the thirteenth century, the average rate was something like 0.5 percent per year, well below the 2 to 4 percent that many economists consider healthy in Western economies today. For contemporaries , the actual rate of inflation was obscured by dramatic short-term fluctuations from one year to the next. These fluctuations were the result of the instability of agricultural production in a subsistence economy highly sensitive to the cost of produce. A good summer might bring a bountiful harvest, lowering the price of produce, while a rainy growing season, crop blight, or disease among the livestock could decimate output, making produce significantly more expensive. A twofold rise or fall in the price of grain from one year to the next was not uncommon. Most of the population was obliged to spend an enormous proportion of their annual income on food, particularly grains and derivative products like bread, and as food prices rose, they needed to demand proportionally more money for their work, leading to a domino effect that affected prices throughout the economy.
Paragraph 4 suggests that a good harvest year would affect the economy in which of the following ways?
A)Inflation rates would be relatively low.
B)Output in other areas of the economy would decrease.
C)The wages of workers would decrease.
D)People would spend a larger proportion of their income on food.
9
3 █ Then as now, exchange rates were not stable. █ Today, the value of a currency represents a complex market reaction to economic circumstances in the country that issues the money. █ In the Middle Ages, fluctuation was in a large measure a result of changes in the coinage itself. █ From time to time, rulers succumbed to the temptation to debase their coinage. By melting down old coins and reissuing them in a smaller size or with a higher alloy content, they could increase the amount of money they had at their disposal. Of course, this quickly caused the market to set a lower value on the coin, sometimes with serious economic consequences. People needed to keep an eye on any change in the coinage, as it directly affected the value of the money they used. Fluctuations in the availability of silver itself also affected the value of money.
However, different factors account for instability in exchange rates in modern times and instability in the Middle Ages.
Where would the sentence best fit? Click on a square [█] to add the sentence to the passage.
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During the European Middle Ages, precious metals were used for cash exchanges.
The value of coins in the Middle Ages depended significantly on their precious metal content, which rulers sometimes altered to increase the amount of money they had.
Money in the Middle Ages was backed by an issuing authority, although the metal used in a coin also had inherent value, making its use a form of barter.
When workers could be hired at lower wages agricultural producers attempted to expand their profits by cultivating a greater variety of livestock and crops
During the thirteenth century, the transition from silver to gold coinage in countries like France and England increased the value of coins minted in these areas.
Coins made entirely of cheap metals rather than gold and silver circulated widely throughout the Middle Ages and decreased public confidence in cash exchanges.
An unstable agricultural economy could cause changes in the value
