Macroeconomics
10th Edition
ISBN: 9780134896441
Author: ABEL, Andrew B., BERNANKE, Ben, CROUSHORE, Dean Darrell
Publisher: PEARSON
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Chapter 7, Problem 2RQ
To determine
To Describe:Functions of money.
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Why is money necessary in an economy? What are its functions and how is it created?
How does the increase of prices of goods affect the purchasing power of money?
What is money? Explain the definition in terms of the functions of money?
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- Why can fiat money be successfully used as a currency despite the fact that it has no intrinsic value backing it up?arrow_forwardwhat is the role of money in the economy?arrow_forwardSuppose you’re at the mall shopping for a pair of shoes and run into NBA player LeBron James. You help him find a perfect gift to give his teammate, Alex Caruso. As thanks for your help, he signed the jersey off his back and gave it to you. Even though his jersey is a valuable asset, why would it not serve as a very good form of money in your attempt to buy shoes? Use the three primary functions of money in your explanation.arrow_forward
- What are the three functions of money in an economy? How does Bitcoin measure up to each standard? What will it take for Bitcoin to be used as a currency? What obstacles are there? If Bitcoin were able to be used for currency at most stores or taken for payment online, would you be more likely to use it? Why or why not? Since online and digital transactions are now commonplace, why would Bitcoin (or another cryptocurrency) be needed for everyday use? Doesn't Apple Pay, PayPal or Google Pay do the same things? How are they different? Do you feel it has a place as an alternative to traditional currencies or is it just a speculative asset? And finally, if Bitcoin is a 'currency' - is it like Yen? Or Euros? Or the Dollar? How is it different?arrow_forwardThroughout history, all sorts of interesting things have been used as money, including fresh fish and cattle. Fresh fish is not an effective form of money. What essential characteristic of money does fresh fish lack that most makes it ineffective?arrow_forward
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