Define seigniorage. How can it be increased?
Explain the U-shaped cost of exchange curve.
Why might you lend money to individuals and businesses in your city through a local bank rather than directly?
Why would someone keep money is his or her pocket (or under the mattress, or in a home safe...) when the bank pays interest?
Suppose that a primitive economy uses rare stones as its money. Suppose that the number of stones declines as stones are accidentally destroyed or used as weapons. What happens to the value of stones over time? What would be the consequence if someone discovered a large amount of new stones? Also, in what ways might the stones have superior money-ish qualities than (say) tobacco?
Why do governments create fiat currencies? Do they help promote an optimal amount of money? Explain.
Define price. Explain the price system that exists under barter and why it is problematic. How does the emergence of a money commodity from barter improve the market system?
Why do economists study the money supply? (Discuss the four reasons covered in class.)
Define: C, M1, M2, M3, and L. How are they related in terms of aggregation and in terms of liquidity?
Define liquidity. Rank the following assets in terms of liquidity, from most to least liquid: money market mutual fund, demand deposit, corporate stock, dollar bill, house, gold, checkable deposit.
Explain the U-shaped cost of exchange curve.
Why might you lend money to individuals and businesses in your city through a local bank rather than directly?
Why would someone keep money is his or her pocket (or under the mattress, or in a home safe...) when the bank pays interest?
Suppose that a primitive economy uses rare stones as its money. Suppose that the number of stones declines as stones are accidentally destroyed or used as weapons. What happens to the value of stones over time? What would be the consequence if someone discovered a large amount of new stones? Also, in what ways might the stones have superior money-ish qualities than (say) tobacco?
Why do governments create fiat currencies? Do they help promote an optimal amount of money? Explain.
Define price. Explain the price system that exists under barter and why it is problematic. How does the emergence of a money commodity from barter improve the market system?
Why do economists study the money supply? (Discuss the four reasons covered in class.)
Define: C, M1, M2, M3, and L. How are they related in terms of aggregation and in terms of liquidity?
Define liquidity. Rank the following assets in terms of liquidity, from most to least liquid: money market mutual fund, demand deposit, corporate stock, dollar bill, house, gold, checkable deposit.
posted by Chris at 4:58 PM
