1. Describe the following. a. Inefficiency of the Barter system b. Difference between Commodity money and...

1. Describe the following.

a. Inefficiency of the Barter system

b. Difference between Commodity money and Fiat Money

c. Four major functions of money

d. Difficulties in using nails (what you find in hardware shops) as money.

Expert Solution

Rahul Sunny answered 7 months ago

Define the following Barter Liquidity Commodity money Fiat money Financial intermediary Bank reserves Fractional reserve system...

Define the following Barter Liquidity Commodity money Fiat money Financial intermediary Bank reserves Fractional reserve system Required reserves Excess reserves Money (deposit) multiplier Portfolio investment Leverage

Explain the difference between commodity money and fiat money. Provide two examples of each.

discuss the efficiency of money over the barter system of exchange.

1. Describe the functions of money. 2. What is fiat money? What is commodity money?

Consider a fiat money/barter system like that portrayed in this chapter.

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1. Explain the differences between commodity money and fiat money. What are the major disadvantages of...

1. Explain the differences between commodity money and fiat money. What are the major disadvantages of commodity money? 2. Why is the money multiplier considered to be a potential multiplier rather than an indication of exactly how much multiplication should be expected? 3. What are the inherent disadvantages of a barter system? 4. Explain Gresham's Law. 5. Calculate M1 and M2 using details from the table given below. Value (in millions) Currency $80 Checkable deposits 30 Traveler's checks 15 Savings...

2. Based on your understanding explain the following with real world examples a) Money b) Inefficiency...

2. Based on your understanding explain the following with real world examples a) Money b) Inefficiency in a barter economy

Explain the difference between direct exchange and indirect exchange Cattle have been used as commodity money...

Explain the difference between direct exchange and indirect exchange Cattle have been used as commodity money for a long time historically. What makes it less than ideal as a measure of value?

Question 1 The existence of money enables us to avoid barter. In this capacity, money is...

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What is the difference between commodity, commodity backed and fiat currency? What are the positives and...

What is the difference between commodity, commodity backed and fiat currency? What are the positives and negatives of using each type?

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