Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Chapter 25, Problem 1.4P
To determine
Why people in Zimb accepts the US dollar as payments for the goods and services.
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To ensure that paper money will be accepted, the U.S. government implicitly promises the public that
Group of answer choices
it will not change currency denominations so that the paper currencies U.S. citizens have will continue to be used for exchanges.
the U.S. monetary system will always be backed by a precious metal.
it will not print money so fast that it loses its value.
it will not change the rate at which the dollar is exchanged for other currencies.
The euro is the official currency of almost all of the European Union as well as several smaller countries. It is the second-most traded currency in the world after the United States dollar. As of August 2018, with more than €1.2 trillion in circulation, the euro has one of the highest combined values of banknotes and coins in circulation in the world, having surpassed the U.S. dollar. By March 2002 it had completely replaced the former currencies of the European Union countries.
Do you think that a common currency for North America (the U.S., Canada and Mexico) would be a good idea? Would it help facilitate trade? Why?
Economics
After falling in half from 1947 to the 1970s (around 10 percent to 5 percent), the share of currency in circulation - also called "cash" - has been relatively stable. It's actually been increasing since the Financial Crisis, but this is probably due to the United States shipping more currency to foreign countries who want to hold and use dollars. In any case, many people find the fact that cash hasn't disappeared in the electronic era with a lot of new forms of payment (like prepaid cards, Venmo/Zelle, etc.). What do you think are the most important reasons why cash is still being held and used today?
Chapter 25 Solutions
Principles of Economics (12th Edition)
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- The principal reason(s) that so much U.S. currency is held outside the U.S is (are). banks all around the world find it convenient to hold large amounts of U.S. dollars U.S. citizens and corporations spend a lot of dollars abroad many people around the world trust the U.S. dollar more than any other currency all of the above none of the abovearrow_forwardThe U.S. economy is faltering, so the value of its associated currency, the dollar, is likely toarrow_forwardAlthough it is a member of the European Community, Denmark is not part of the eurozone; it has its own currency, the krone. Because the krone is pegged to the euro, Denmark's central bank is obliged to maintain the value of the krone within 2.25 percent either above or below the value of the euro. According to an article in the Wall Street Journal, in 2017, the Danish central bank was forced to intervene in foreign currency markets "to keep the krone from strengthening too much." If the krone was strengthening, did it take more kroner to exchange for a euro or fewer kroner? Briefly explain. More kroner, because the krone has more value. Fewer kroner, because the krone has less value. Fewer kroner, because the krone has more value. More kroner, because the krone has less value.arrow_forward
- Discuss the kinds of money that were used at Japanese Occupation of the Philippinesarrow_forwardHow much damage can Saudi Arabia do to the United States economy if they started selling their Oil using another type of currency rather than the US dollar?arrow_forwardWhy do highly inflated countries such as Brazil tend to have weak home currencies?arrow_forward
- Use the excel file above to answer the following question. Which countries have a premium value of the dollar?arrow_forwardDistinguish between commodity money and fiat moneyarrow_forwardAnswer questions 1-4 about Nigeria's macroeconomy (Nigeria's currency): Currency in Circulation (October 2020) 40.5 billion nigerian currency Reserves (October 2020) 34.2 billion nigerian currency M1 (October 2020) 2,465.9 billion nigerian currency M2 (October 2020) 2,638.8 billion nigerian currency Calculate the size of the monetary base in October 2020. one decimal place. Calculate the size of demand (checking) deposits in October 2020. Round your answer to one decimal place. Calculate the size of savings deposits in October 2020. Round your answer to one decimal place.arrow_forward
- Deposits of Australian dollars held at authorised deposit-taking institutions are government money horizontal money part of the monetary base?arrow_forwardWhat is the currency deposit ratarrow_forwardWhy can fiat money be successfully used as a currency despite the fact that it has no intrinsic value backing it up?arrow_forward
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