for impurities. When an economy uses gold as money (or uses paper money that is convertible into gold on demand), it is said to be operating under a gold standard. 610 PART TEN MONEY AND PRICES IN THE LONG RUN T HE ROLE OF SOCIAL CUSTOM IN THE MON-etary system is most apparent in for-eign cultures with customs very different from our own. The following article describes the money on the is-land of Yap. As you read the article, ask yourself whether Yap is using a type of commodity money, a type of fiat money, or something in between. Fixed Assets, or Why a Loan in Yap Is Hard to Roll Over B Y A RT P INE Y AP , M ICRONESIA —On this tiny South Pa-cific island, life is easy and the currency is hard. Elsewhere, the world’s troubled monetary system creaks along; floating exchange rates wreak havoc on currency markets, and devaluations are common-place. But on Yap the currency is as solid as a rock. In fact, it is rock. Lime-stone to be precise. For nearly 2,000 years the Yapese
This is the end of the preview. Sign up
access the rest of the document.
This note was uploaded on 07/30/2010 for the course ECON 120 taught by Professor Abijian during the Spring '10 term at Mesa CC.