Ch. 2 - Chapter 2 Homework Conceptual Problems 1 The...

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Chapter 2 Homework Conceptual Problems: 1. The problem that having only cheese as money would create would be that it has a very small store of value. That is, it can retain its worth for a short amount of time, but after that it would have no value. It also may not be easily transportable in large amounts. The impact of the recommendation by the doctors would decrease of the value of cheese. Since people would know that they are not supposed to be eating as much cheese, they would not want to accept as much for payment for other goods and services. The Brieonians would need to find another form of payment. If the economy were to become more industrialized, I would expect to see that the monetary system would evolve from cheese to a more stable currency that could hold its store of value for a longer time. 2. Three ways that I could pay for my morning cup of coffee would be with cash, a debit card, or a credit card. The advantage of paying with cash is that I don’t have to give out any personal information and that the debt is settled instantly. The disadvantage would be if maybe I only have a small amount of cash and I need it for something else throughout the day, I wouldn’t have it. The advantages of using a debit card would be that is faster than cash, there is no counting, just a swipe of the card and that the money comes right out of my checking account, and so it is just like paying cash because I don’t need to worry about paying it off. The disadvantages would be that I may spend more because I don’t have to count out actual cash and that there is a possibility of my banking information being stolen. The advantage of a credit card would be that I don’t have to pay for the coffee until I get my statement. The disadvantage would be that after I pay with the credit card, I still owe money for it and I have to wait for the transaction to be completely over. There may also be interest that accrues, so I will end up paying more for that cup of coffee than it is worth. 3.
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This note was uploaded on 10/31/2010 for the course ECON 2310 taught by Professor Williams during the Spring '10 term at Western New Mexico.

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Ch. 2 - Chapter 2 Homework Conceptual Problems 1 The...

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