PQTopicII - viii) Compare modern digital forms of money...

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Practice Questions: Set 2. What is Money? Lecture Date: Jan. 5 th i) What is barter? ii) List three problems that barter economies encounter. Explain each of these problems. iii) Explain why the problems of barter become more severe when the economy becomes more complex. (Hint: It’s probably best to tackle this one problem at a time.) iv) List the three properties of money. Explain each of these properties. v) Explain how money solves the problems of barter. (Hint: You can relate each property of money to one of the problems of barter.) vi) Recall the discussion of cigarette money in the P.O.W. camp. Explain why prisoners who did not smoke were willing to accept cigarettes as payment for their goods. vii) Explain why a commodity does not need to physically change hands to be used as money. Give a real world example.
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Unformatted text preview: viii) Compare modern digital forms of money (e.g. electronically stored chequing account balances) with the stone money used on the island of Yap. What are the similarities? ix) Across history, many agricultural commodities have been used as money. Milk, however, is a commodity that is never used as money. Explain why this is the case. x) Explain how a centralized marketplace and good record keeping technology reduces the problems of barter. xi) What is meant by money as memory? xii) What is the more important role of money: as a record of transactions or as a solution to the double coincidence of wants problem? Discuss. xiii) What is a monetary aggregate? Why do we have so many different ones? In general, what are the differences between different monetary aggregates?...
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This note was uploaded on 01/26/2012 for the course ECON 401 taught by Professor Burbidge,john during the Fall '08 term at Waterloo.

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PQTopicII - viii) Compare modern digital forms of money...

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