key term - Penny

Definition

A penny is the lowest denomination of the United States currency, equivalent to one-hundredth of a dollar. It is a copper-plated zinc coin that has been in circulation since the late 18th century, serving as a fundamental unit in money applications and transactions.

5 Must Know Facts For Your Next Test

1. The penny has been a part of the U.S. currency system since the late 1700s, making it one of the oldest coins still in circulation.
2. The current penny is composed of 97.5% zinc and 2.5% copper, with a total weight of 2.5 grams.
3. Despite its low value, the penny remains an important unit in money applications, such as calculating change, pricing items, and recording financial transactions.
4. The design of the penny has undergone various changes over the years, with the current design featuring the profile of Abraham Lincoln on the obverse and the Lincoln Memorial on the reverse.
5. The production and distribution of pennies in the United States is overseen by the United States Mint, a bureau of the Department of the Treasury.

Review Questions

• Explain the role of the penny in basic money applications, such as calculating change and pricing items.
  • The penny is a crucial component in money applications, as it allows for the precise calculation of change and the pricing of items. When making a purchase, the penny is used to account for the final cost, ensuring that the total amount owed is accurately represented. Additionally, the penny is used in change calculations, enabling customers to receive the exact amount of change due to them. Without the penny, these basic money transactions would be more challenging to execute, potentially leading to rounding errors or the inability to provide the precise amount of change.
• Describe how the composition and design of the penny have changed over time, and explain the significance of these changes.
  • The composition and design of the penny have undergone various changes throughout its history. Initially, the penny was made of pure copper, but in the late 20th century, the composition was changed to a zinc core with a thin copper coating. This change was made to reduce the production cost of the penny, as the price of copper had risen significantly. Additionally, the design of the penny has been updated several times, with the current design featuring the profile of Abraham Lincoln on the obverse and the Lincoln Memorial on the reverse. These design changes are significant as they reflect the evolving cultural and historical importance of the penny within the United States currency system.
• Analyze the role of the United States Mint in the production and distribution of pennies, and discuss the potential challenges or controversies surrounding the continued use of the penny in modern financial transactions.
  • The United States Mint, a bureau of the Department of the Treasury, is responsible for the production and distribution of pennies throughout the country. This includes overseeing the minting process, ensuring the quality and consistency of the coins, and managing the supply to meet the demand for pennies in financial transactions. However, the continued use of the penny has been the subject of ongoing debate and controversy. Some argue that the penny has become increasingly irrelevant in modern financial transactions due to its low purchasing power, and that the cost of producing and circulating pennies outweighs their practical value. Others contend that the penny holds cultural and historical significance and should be preserved as a fundamental unit of the U.S. currency system. The debate surrounding the future of the penny highlights the complex considerations involved in the management and evolution of a country's monetary system.

Related terms

Nickel:

A five-cent coin made of nickel-plated copper, the second-lowest denomination in the U.S. currency system.

Dime:

A ten-cent coin made of cupro-nickel alloy, the fourth-lowest denomination in the U.S. currency system.

Quarter:

A twenty-five-cent coin made of cupro-nickel alloy, the second-highest denomination in the U.S. currency system.