Chapter 3: Q. 10 (page 111)
In ancient Greece, why was gold a more likely candidate for use as money than wine?
Short Answer
Gold is more store of value than wine
Chapter 3: Q. 10 (page 111)
In ancient Greece, why was gold a more likely candidate for use as money than wine?
Gold is more store of value than wine
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Get started for freeIn April 2009, year-over-year the growth rate of M1 fell to 6.1%, while the growth rate of M2 rose to 10.3%. In September 2013, the growth rate of the M1 money supply was 6.5%, while the growth rate of the M2 money supply was about 8.3%. How should Federal Reserve policymakers interpret these changes in the growth rates of M1 and M2?
Over several hundred years, payments systems used in countries across the world have evolved. For each of the following situations identify the type of payment utilized and at least one reason why economies are moving from checks to electronic payments.
a. Sheila visits a local grocery store to purchase a dozen eggs and a bag of dog food. She uses a โฌ100 note to pay for the goods.
b. Rachael Garcia, a manager at Proxall Pharmacy, used a piece of gold worth $20 to pay for office supplies she needed this month.
c. Edward has just moved to the city to be closer to his office. He was shopping online for some pieces of furniture and he bought a wardrobe and a table lamp. He used a checking account to initiate an automatic bill payment for the items.
19. The table below shows hypothetical values, in billions of dollars, of different forms of money.
a. Use the table to calculate the M1 and M2 money supplies for each year, as well as the growth rates of the M1 and M2 money supplies from the previous year.
b. Why are the growth rates of M1 and M2 so different? Explain.
2019 | 2020 | 2021 | 2022 | |
Currency | 880 | 895 | 900 | 906 |
Money market mutual fund shares | 680 | 685 | 683 | 692 |
Saving account deposits | 5,500 | 5,780 | 5,968 | 6,105 |
Money market deposit accounts | 1,214 | 1,245 | 1,274 | 1,329 |
Demand and checkable deposits | 1,000 | 972 | 980 | 993 |
Small denomination time deposits | 840 | 871 | 1,133 | 1,576 |
Traveler's check | 5 | 5 | 4 | 3 |
3-month treasury bills | 1,986 | 2,374 | 2,436 | 2,502 |
Go to the St. Louis Federal Reserve FRED database, and find data on small-denomination time deposits (STDSL), savings deposits and money market deposit accounts (SAVINGSL), and retail money market funds (RMFSL). Calculate the percentage change of each of these three components of M2 (not included in M1) from the most recent month of data available to the same time one year prior. Which component has the highest growth rate? The lowest growth rate? Repeat the calculations using the data from January 2000 to the most recent month of data available, and compare your results. Use your answers from question 1 to determine which grew faster: the non-M1 components of M2, or the M1 money supply.
Why were people in the United States in the nineteenth century sometimes willing to be paid by check rather than with gold, even though they knew there was a possibility that the check might bounce?
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