EBK PRINCIPLES OF MACROECONOMICS
12th Edition
ISBN: 8220101472298
Author: Oster
Publisher: PEARSON
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Chapter 10, Problem 1.4P
To determine
Why people in Zimb accepts the US dollar as payments for the goods and services.
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After suffering two years of staggering hyperinflation, the African nation of Zimbabwe officially abandoned its currency, the Zimbabwean dollar, in April 2009 and made the U.S. dollar its official currency. Why would anyone in Zimbabwe be willing to accept U.S. dollars in exchange for goods and services?
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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…
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- Which of the following is NOT a function of money? A. A medium of exchange B. A measure of inflation C. A store of value D. A unit of accountarrow_forward“Whenever currency is deposited in a commercial bank, cash goes out of circulation and, as a result, the supply of money is reduced.” Do you agree? Explain why or why not.arrow_forwardState three ways in which a government can influence the value of its currency. For each, state whether the activity affects the supply-side or demand-side of the market, and name a disadvantage of the strategy.arrow_forward
- Why can fiat money be successfully used as a currency despite the fact that it has no intrinsic value backing it up?arrow_forwardDescribe the concept of commodity money and provide historical examples of commodities used as money. A) Commodity money is a type of currency with no intrinsic value. B) Commodity money is currency backed by tangible assets, such as gold, silver, or other valuable commodities. Historical examples include the gold standard, where currency could be exchanged for a fixed amount of gold, and the use of cattle as currency in some ancient societies. C) Commodity money refers to digital cryptocurrencies like Bitcoin. D) Commodity money has no historical precedent.arrow_forwardDistinguish between commodity money and fiat moneyarrow_forward
- What is the fundamental difference between commodity money and fiat currency? commodity money has no intrinsic value, fiat is gold based commodity and fiat money are synonymous terms so long as they consistute the medium of exchange commodity money has intrinsic value, fiat does not commodity money requires governance institutions, fiat does notarrow_forwardWhich statement is not true? Commodity money cannot be fiat money and vice-versa. Commodity money can be fiat money. Fiat money can be commodity money. Both commodity money and fiat money can be store of value.arrow_forward
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