There are 2 ways to answer the following question about the dime:

Dime question:  Will Jim use the dime to form an amount of money? 
   
There are 2 ways to answer that question (YES/NO).

For each of these two ways to answer that question,

there are 2 ways to answer the following question about the nickel:

Nickel question:  Will Jim use the nickel to form an amount of money? 
   
There are 2 ways to answer that question (YES/NO).

So there are 2*2=4 ways to answer the questions about the dime 
and the nickel.

For each of these 4 ways to answer those questions about the
dime and the nickel,

there are 2 ways to answer the following question about the quarter:

Quarter question:  Will Jim use the quarter to form an amount of money?

There are 2 ways to answer that question (YES/NO).

So there are 2*2*2=8 ways to answer the questions about the dime,
the nickel, and the quarter.

1. If the answers are yes,yes,yes, then the amount of money is 10¢+5¢+25¢=40¢
2. If the answers are yes,yes,no, then the amount of money is 10¢+5¢=15¢
3. If the answers are yes,no,yes, then the amount of money is 10¢+25¢=35¢
4. If the answers are yes,no,no, then the amount of money is 10¢
5. If the answers are no,yes,yes, then the amount of money is 5¢+25¢=30¢
6. If the answers are no,yes,no, then the amount of money is 5¢
7. If the answers are no,no,yes, then the amount of money is 25¢
*8. If the answers are no,no,no, then the amount of money is 0¢

The number of ways to form an amount of money can be gotten by raising 2 to 
the power of the number of coins. In this case 23 = 8 amounts of money.

However we do not wish to count the case in which he doesn't
use any of his coins to form an amount of money, considering that
case to be 0¢, so we must subtract 1 and get 23-1 = 7  

Edwin