2. Throughout history, gold has been used as a medium of exchange. Goldingots, gold coins, gold bars, whatever.a. Why do you think other commodities were not used as a medium of exchangefor the same length of time? For example, think about why diamonds wereseldom used as money.b. Why do you think paper fiat currency replaced gold?c. Is there a transaction cost problem with paper money? If so, explain how. Ifnot, explain why not.

Here's a breakdown of why gold dominated as a medium of exchange for so long, and the rise of paper…

Answered: 2. Throughout history, gold has been…

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter25: Money, Banking, And The Federal Reserve System

Section: Chapter Questions

Problem 3P

See similar textbooks

Similar questions

Why were people in the United States in the nineteenthcentury sometimes willing to be paid by check ratherthan with gold, even though they knew there was a possibility that the check might bounce?
Which of the following statements is true? O The necessary condition required for money to function as a medium of exchange is that it also needs to be a store of value. O The hours of labor that go into producing a product are a better unit of account than paper money. OOne of the limitations of using money is that it does not allow for the transfer of purchasing power into the future. OWhen money is used as a yardstick to describe the price of various goods and services, it serves as a store of value.
Fiat money has Select one: a. value, because it can be redeemed for gold by the central bank. O b. little to no intrinsic value but is backed by the quantity of gold held by the central bank. C. a great intrinsic value that is independent of its use as money. O d. little to no intrinsic value and is authorized by the central bank or governmental body. Clear my choice Fini
How can a commercial bank "create" money? Select one: O a. by making loans O b. by increasing the rate of inflation O c. by issuing its own Central Bank bonds O d. by selling government Treasury bills to the commercial banks O e. by selling some of its foreign-currency reserves for domestic currency
Which of the following is true about money in the colonies? O Whether with friends or strangers, people found bartering to be convenient O Thomas Jefferson thought the use of money was oppressive O Money tended to change in such a way as to ease and thereby promote commerce O There was no such thing as commodity money or fiat money
If Canadian Tire issues its own "money" and it becomes generally accepted by people in paying for goods and services at other stores, then we would consider it to 84 be ca htt O A. legal money because Canadian Tire is a Canadian incorporated company. O B. a form of fiat money. O C. Mlegal money because the government has not issued it O D. a form of fiduciary money As hav
The characteristic of money as a store of value implies: a. Money will remain valuable from one day to the next O b. None of the Above O C. Money allows us to quote prices and record debt O d. Money is acceptable as payment for goods and services
An increase in the demand for non-monetary gold causes the money to O demand for; increase supply of; increase demand for; decrease O supply of; decrease
Gold and silver have been historically used as materials for making commodity money (coins) by many different human cultures throughout history. This was because they were difficult to obtain and less prone to rust than other metals. In other words, they could perform one of the functions of money better than other metals. Which function is that? Which function of money do gold and silver perform better than other metals? a. Unit of account b. Store of value c. Medium of exchange d. Standard of deferred payment
#28.The primary difference between commodity money and fiat money is that a fiat money is a medium of exchange but commodity money is not. b fiat money has intrinsic value but commodity money does not. c commodity money is a medium of exchange but fiat money is not. d commodity money has intrinsic value but fiat money does not.
Which type of money has the lowest opportunity cost? a. silver coins b. fiat money c. commodity money d. diamonds e. gold coins
Treasury bills are traded in a Select one: O a. money O b. stock O c. capital O d. d. government market.

SEE MORE QUESTIONS

Recommended textbooks for you

Exploring Economics

Economics

ISBN:

9781544336329

Author:

Robert L. Sexton

Publisher:

SAGE Publications, Inc

ECON MACRO

Economics

ISBN:

9781337000529

Author:

William A. McEachern

Publisher:

Cengage Learning

Survey Of Economics

Economics

ISBN:

9781337111522

Author:

Tucker, Irvin B.

Publisher:

Cengage,

Exploring Economics

Economics

ISBN:

9781544336329

Author:

Robert L. Sexton

Publisher:

SAGE Publications, Inc

ECON MACRO

Economics

ISBN:

9781337000529

Author:

William A. McEachern

Publisher:

Cengage Learning

Survey Of Economics

Economics

ISBN:

9781337111522

Author:

Tucker, Irvin B.

Publisher:

Cengage,

Essentials of Economics (MindTap Course List)

Economics

ISBN:

9781337091992

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

Brief Principles of Macroeconomics (MindTap Cours…

Economics

ISBN:

9781337091985

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

SEE MORE TEXTBOOKS