Exam (elaborations)
ECO 4223 LUTHER EXAM 1 QUESTIONS AND ANSWERS WITH SOLUTIONS 2024
- Course
- Institution
ECO 4223 LUTHER EXAM 1 QUESTIONS AND ANSWERS WITH SOLUTIONS 2024
[Show more]
Content preview
ECO 4223 LUTHER EXAM 1 QUESTIONSAND ANSWERS WITH SOLUTIONS 2024
Money - ANSWER commonly accepted medium of exchange
·Common functions of money - ANSWER o Medium of exchange (necessary, but not sufficient)
o Store of value (necessary, but trivial)
o Unit of account (unnecessary)
Inside Money - ANSWER (bank money) created within banking system and is a claim to some other asset
that is used to make payments.
Inside Money Example - ANSWER Checking account, bank owes you that money and you can use a debit
card to make a payment.
Outside Money - ANSWER (base money) created outside banking system and is money used for final
settlement because it's not redeemable.
Outside Money Example - ANSWER $100 bill (cash is not redeemable)
Commodity Money - ANSWER is a good that is used as money. Historical examples include gold, silver
and salt.
Fiat Money - ANSWER is an item that has no use apart from being a commonly accepted medium of
exchange. Modern examples the dollar and euros.
Why Do We Use Money? (2 views) - ANSWER 1) Historical Materialist View
2) Economic View
Historical Materialist View - ANSWER (Anthropologist favor) money is a revenue-raising technology
introduced by governments to collect taxes more effectively.
, Economic View - ANSWER (Economists favor) money is a productive technology that reduces transaction
costs hence, facilitates exchange.
State Theory of Money - ANSWER or chartalism, maintains that money was created by the government.
Tools governments use to determine medium of exchange (4) - ANSWER o Public receivability
o Legal tender status
o Forced money laws
o Ban alternatives
Public Receivability - ANSWER the government commits to accepting taxes and making purchases with it.
Legal tender status - ANSWER courts are required to recognize the item as satisfactory payment of any
debt, and settle disputes by requiring payment in the item.
Forced money laws - ANSWER the government punishes those refusing to accept its preferred money.
Ban alternatives - ANSWER the government punishes those using some alternative money.
Epistemic Problem of State Theory of Money - ANSWER you have to accept someone recognized the
potential for money- before money had ever existed
Spontaneous Order Theory of Money - ANSWER describes a situation where the outcomes is not the
intention of the relevant decision makers. The outcome-money-is a product of human action, but not
design.
Characteristics of a good money (6) - ANSWER o Saleable (widely accepted)
o Durable
o Portable
o Divisible
o Uniform
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Performance. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $11.99. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
77254 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now