Question by TarTarSauce: Help!!!!! Take home Economics Exam!!!!!?
Q1) It says on your currency “this note is legal tender for all debts public and private”. Discuss one place in your(college student or anyone else) daily economic life that currency is not usable for debts. Also distinguish between “government created money” and “market created money”.
N.B please note that the answer to Q1) is not metaphysical or metaphorical, so no debt to society!!!!
Q2) The newspaper edictors argue that the federal reserve should increase the money supply to stimulate the economy, eventually shifting aggregate demand . Assuming the world works the way the editors want it to, carefully explain how the fed does it making sure to discuss the role of banks.
c) con’td from Q.2)
A writer on an internet blog argues that the policy recommended in part (b) will not work, and to bolster this point, he refers to ‘horticulture’. What is this blogger talking about? Show graphically how it should work.
Best answer:
Answer by so_classy
Q1) There are some places where currency is not welcomed, some companies, for protection purposes, do not accept cash.
Some stores when they use electronic pockets, cards, or bonds.
Government created money refers to money supplied by the central bank in order to inject currency into the system and stimulate the economy, market created money comes from the increasing need of currency due to the existance of more goods in the market that would need money to be purchased.
Q2) This is partially true, because on the one hand we’ll have the stimulus but on the other hand we will have high inflation rates, so there must be a balance in the money supply and the level of prices.
Q2 c) I’m sorry I cant’ comment on this one since I don’t know about this blog.
Good luck
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