Related to the Economics in Practice on p. 509: In Santa Cruz, red feathers from the Scarlet Honeyeater bird were used as currency. If someone in Santa Cruz had purchased a "huge amount " of these feathers as an investment, then in this instance, the feathers were being held as a(n) legal tender. store of value. medium of exchange. unit of account.

Related to the Economics in Practice on p. 509: In Santa Cruz, red feathers from the Scarlet Honeyeater bird were used as currency. If someone in Santa Cruz had purchased a "huge amount " of these feathers as an investment, then in this instance, the feathers were being held as a(n) legal tender. store of value. medium of exchange. unit of account.

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter24: Money And The Federal Reserve System

Section: Chapter Questions

Problem 2SQ

See similar textbooks

Similar questions

v. Many early cryptocurrency investors have adopted a strategy known as HODL—Hold On for Dear Life. They believe that over time the value of cryptocurrencies, such as Bitcoin, will only continue to rise. If this is a dominant strategy among most investors, how does this affect cryptocurrencies’ ability to function as a currency?
Economics After falling in half from 1947 to the 1970s (around 10 percent to 5 percent), the share of currency in circulation - also called "cash" - has been relatively stable. It's actually been increasing since the Financial Crisis, but this is probably due to the United States shipping more currency to foreign countries who want to hold and use dollars. In any case, many people find the fact that cash hasn't disappeared in the electronic era with a lot of new forms of payment (like prepaid cards, Venmo/Zelle, etc.). What do you think are the most important reasons why cash is still being held and used today?
This is the second question: Assume that you start by borrowing either $100,000 or 10,500,000 Japanese Yen. Using a starting yen per dollar exchange of 105 Yen per dollar and a one- year US interest rate of 5% and one-year Japanese interest rate of 0.5%. Explain how a hedge fund can use the carry trade to make profits or incur losses. In your answer, show the profits or losses in both dollars and yen in the following four cases [(i) to (iv)] making it clear in each case what the profit or loss is in both yen and dollars. (a) The exchange rate stays the same at 105 yen per dollar. (b) The exchange rate moves to 75 yen per dollar (c) The exchange rate moves to 125 yen per dollar (d) State the breakeven exchange rate for the carry trade
Suppose that company A has an asset worth £10 million yielding an interest of 7%. Suppose that A is a company based in Japan. Explain how it can use a currency swap to transform the asset to an asset paying Yen (currency in Japan).
Which of the following functions as both a store of value and a medium of exchange? a. Cash and stocks b. Neither cash nor stocks c. Cash but not stocks d. Stocks but not cash
Which of the following would not (or has not) functioned as a store of value, and also provide a medium of exchange, and unit of account? O Cowrie Shell an Ipod Gold an estate
E1 Countries that have good financial intermediaries: have savings that are used less effectively. channel fewer savings into funding for investments in capital. have smaller loan markets. make more good investments..
Consider the following extract and answer the questions that follow. El Salvador Becomes the First Country To Adopt Bitcoin As Official Currency After the COVID-19 pandemic, the few remaining limitations to the digital world seem to have disappeared, including the conquest of cryptocurrencies. The definitive step seems to have been El Salvador's decision to transform Bitcoin into the official currency, being the first country in the world to do so. However, as evolved as President Nayib Bukele's decision seemed to be, the reality of bringing the heaviest digital currency into the real world seems destined for chaos. In announcing his move, Bukele claimed that the digital currency would help Salvadorans save an estimated "$400 million," which the government estimates is spent annually on remittance fees, NBC News explained. The government made the Chivo digital wallet available to citizens, claiming it would be available on the App Store and Google Play shortly before noon local time on…
BOP Transactions. Identify the correct BOP account for each of the following transactions. Identify the correct BOP account for each of the following transactions. Specify credit or debit as well.1 Scandinavian Airlines System (SAS) buys jet fuel at Newark Airport for its flight to Copenhagen.2 Hong Kong students pay tuition to the University of California, Berkeley.3 The U.S. Air Force buys food in South Korea to supply its air crews.4 A Japanese auto company pays the salaries of its executives working for its U.S. subsidiaries.5 A U.K. corporation purchases a euro-denominated bond from an Italian MNE.
International Gold Standard (19th century): If different countries fix the price of their currencies e in terms of gold this immediately implies that e are fixed. If the Central Bank of two countries stand ready to buy and sell gold at a fixed price in terms of their respective domestic currencies, then there is only one value of e that eliminates the possibility of arbitrage. Suppose that S100 buys 1 ounce of gold and 100 pounds buys lounce of gold. Under fixed exchange rates, this implies that IS buys Ipound. Explains what would happen (arbitrageurs' action and result) if instead e-1S buys 2 pounds
SECTION 8 4. You have the following extract of the consolidated balance-of-payment of Norway in millions of dollars: 2015 2016 2017 2018 Goods and services -17,485.5 -21,920.3 -23,202.9 -33,562.3 Credit 76,346.3 75,984.8 80,573.5 88,324.0 Debit 93,831.8 97,905.1 103,776.4 121,886.3 Based on the Norwegian balance of trade, how is the supply of the Norwegian krone changing compared to demand? What does this indicate about the value of the krone? Justify your answer.
How BMW Dealt with Exchange Rate Risk BMW Group, owner of the BMW, Mini and Rolls-Royce brands, has been based in Munich since its founding in 1916. But by 2011, only 17 per cent of the cars it sold were bought in Germany. In recent years, China has become BMW's fastest-growing market, accounting for 14 per cent of BMW's global sales volume in 2011. India, Russia and Eastern Europe have also become key markets. The Challenge Despite rising sales revenues, BMW was conscious that its profits were often severely eroded by changes in exchange rates. The company's own calculations in its annual reports suggest that the negative effect of exchange rates totalled 2.4bn between 2005 and 2009. BMW did not want to pass on its exchange rate costs to consumers through price increases. Its rival Porsche had done this at the end of the 1980s in the US and sales had plunged. The Strategy BMW took a two-pronged approach to managing its foreign exchange exposure. One strategy was to use a "natural…