{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Principles of Economics- Mankiw (5th) 592

Principles of Economics- Mankiw (5th) 592 - 612 PA R T T E...

Info icon This preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
612 PART TEN MONEY AND PRICES IN THE LONG RUN CASE STUDY WHERE IS ALL THE CURRENCY? One puzzle about the money stock of the U.S. economy concerns the amount of currency. In 1998 there was about $460 billion of currency outstanding. To put this number in perspective, we can divide it by 205 million, the number of adults (age sixteen and over) in the United States. This calculation implies that the average adult holds about $2,240 of currency. Most people are surprised to learn that our economy has so much currency because they carry far less than this in their wallets. Who is holding all this currency? No one knows for sure, but there are two plausible explanations. The first explanation is that much of the currency is being held abroad. In foreign countries without a stable monetary system, people often prefer U.S. dollars to domestic assets. It is, in fact, not unusual to see U.S. dollars being used overseas as the medium of exchange, unit of account, and store of value.
Image of page 1
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern