Monetary Policy - Assignment #1

Monetary Policy - Assignment #1 - greater the demand, the...

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Monetary Policy Assignment #1: 1. What's the rationale for adopting the US dollar as "legal tender" in Argentina? It allows countries to link their currencies as well as allow for relative stability between different currencies. 2. Which of the 3 functions of money does the Argentinian peso fall short on? The Argentinian peso falls short on the store of value. 3. What does the author say is behind the movement to establish new currencies and replace old currencies? The purpose of this movement is to increase the volatility of value of currency. 4. How is currency like beanie babies? Currency obeys the law of supply and demand, hence similar to other commodities. For example, the greater the supply of a currency, the less it's worth; the less the supply, and the
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Unformatted text preview: greater the demand, the more that currency will cost. 5. Why don't we use beanie babies as currency? It could be used as currency technically; however, this could cause chaos in that the beanie cannot be made into smaller units. People could change their mind and decide that they like another product more, like Furbies, and then the beanie babies would lose their value. 6. Which function of money would a beanie baby have problems fulfilling? The beanie baby can neither be divided not used as an exchange unit. 7. Why aren't Disney Dollars accepted outside the Disney theme parks? It's not a standard of value, which means that the money may not be acceptable elsewhere....
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