3. The kinds of moneyPersonal possession of currency is prohibited in U.S. prisons, although, in practice, prisoners still exchange goods and services. Until 2003, the year inwhich the U.S. government banned smoking in federal penitentiaries, cigarettes were the preferred medium of exchange among prisoners. Oneimportant difference between using cigarettes and using dollars as money is thathave intrinsic value.Cigarettes are an example ofmoney.

Answered: Image /qna-images/answer/5bbcc367-be7b-4dd3-ab05-fb65afcdf4a8.jpg

Answered: 3. The kinds of money Personal…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Discuss the main functions of money What is a double coincidence of wants Distinguish between commodity money and fiat money In many casinos, one can buy chips to use for gambling. Within the casino walls, those chips can often be used to buy food and drinks. Do chips in a gambling casino serve all the functions of money? Explain. Name an item that is a store of value, but does not serve the other functions of money. Explain your answer.
Using the M1 definition of Money, M1 = _____________ Category Amount Currency and coin held by the public $1,000 Checking account balances $2,000 Traveler's checks $50 Savings Account balances $4,000 Small denomination time deposits (CD) $3,000 Money market deposit accounts in banks (MMDA) $1,500 Money Market Mutual Fund Shares (MMMF) $2,500 Bitcoins $1,000 Select one: a. 7050 b. 2050 c. 3050 d. 1050
#27 You saved $900 in currency in your piggy bank to purchase a new iPhone. The $900 you kept in your piggy bank illustrates money’s function as a _______. The iPhone’s price is posted as $900. The $900 price illustrates money’s function as a _____. You use the $900 to purchase the iPhone. This transaction illustrates money’s function as a ______. a medium of exchange, unit of account, store of value b medium of exchange, store of value, unit of account c store of value, medium of exchange, unit of account d store of value, unit of account, medium of exchange
3. Mike makes excellent cheesecake and Sue is very good at changing the oil in a car. Sue agrees to change the oil in Mike’s car if he makes her a cheesecake. This is an example of: legal tender. barter commodity money. fiat money.
WRITE THE QUESTION NUMBER AND ANSWER USING CAPITAL LETTER ONLY. 1. Money ________. A. is always composed of coins and paper C. requires a double coincidence of wants B. loses its value as it becomes older D. is any commodity that is generally acceptable as a means of payment 2. The functions of money are A. medium of exchange and the ability to buy goods and services C. pricing, contracts, and means of payment. B. medium of exchange, unit of account, and means of payment D. medium of exchange, unit of account, and store of value 3. Matthew purchases a candy bar with his allowance. This purchase represents using money as A. a medium of exchange C. an unit of account B. a store of value D. none of the above 4. M1 includes A. currency, checking deposits and traveler's checks. C. money, checking deposits and traveler's checks B. money, stocks and bonds. D. money market mutual funds, stocks and bonds 5. The definition of M2 includes…
2
Economists have documented Pacific island economies in which large rocks and boulders were used as money. While this may work for a group of people who only transact with others on the island, the rocks would not be a useful form of money in the world economy because: A. Large rocks are not easily standardized B. Large rocks are not easily divisible C. Large rocks are not easy to carry D. All of the above are true
2. When you discover a $20 bill in your coat pocket that you placed there last winter, you find you were unexpectedly using money as a O medium of exchange. store of value. unit of account. factor of production.
In an economy, the banks prefer to keep 25% of their deposits in reserve. The population likes to keep their currency holdings equal to 10% of the deposits. Initially, there was zero money in the economy. Then the central bank buys $120 worth of T-bills from a household. The household receives $120 on its checking account. 1. the commercial bank formed reserves and gave out a loan. The population allocated the lent funds between the currency in pockets and checkable accounts. Before anything else happens, how much money is there in the economy at the end of Round 1? ANSWER: 288 For question 1 How is this answer obtained?, How would you solve question 2. 2. In Round 2, more lending, borrowing, and reserve formation takes place. How much is in DEPOSITS in the economy at the end of Round 2?
Alberto is a carpenter and he needs a new saw in order to make more cabinets to sell to his buyers. To do this, he sells a bench he has made, and uses the money to purchase a new saw. What can one conclude about the function of money in this scenario? A. Alberto is using money as a means of deferring payment. B. Alberto is using money as a medium of exchange. C. Alberto is using money as a store of value. D. Alberto is using money as a unit of account.
(Please all Answer.)
Why are credit cards not included in the money supply even though they can be used easily for transactions? A. Because credit cards are not always 100% reliable. B. Because credit cards are not physical money. C. Because there are other more efficient methods of money supply. D. Because the credit card company is effectively making you a loan..

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