Untitled ECON 2050 MONEY AND FINANCE PRACTICE QUESTIONS (WEEK 3) True/False Questions 1. Like paper money, commodity money does not have intrinsic value. 2. The Mesopotamia clay tablets were...

answer the questions of the two documents separately


Untitled ECON 2050 MONEY AND FINANCE PRACTICE QUESTIONS (WEEK 3) True/False Questions 1. Like paper money, commodity money does not have intrinsic value. 2. The Mesopotamia clay tablets were transferable debt and debtors were expected to pay interest. 3. The Swedish ‘Riksbank’ exploited the ‘law of large numbers’ to make more loans and increase money in circulation. 4. Throughout the Roman Empire, the denarius was almost pure silver and there was no practice of debasement, nor did Gresham’s Law come into play. 2 5. The Medici bankers learnt a lesson that in finance small is seldom beautiful. 6. Gold and silver were used as ‘money’ in the Americas before the arrival of Spanish conquerors 7. In the early days of the Australian colonies, barter exchange and commodity currencies were the main means of conducting transactions. 8. From the beginning, the Bank of England was created as a central bank to issue notes and provide lender of last resort facility to other banks. ------------------------------------------------------------------------------- 3 Short-answer Questions 1. Choose one type of commodity money and discuss if it meets the modern functions and attributes of money. 2. Discuss the monetary thought of the Jixia Academy in China during 600 – 300 BCE and how this might be relevant in the modern context. 3. The 17th century saw the foundation of three distinctly novel institutions to serve the public as well as private financial functions. Discuss the main innovative features of these institutions. 4. Explain the interdependence between financial revolution and industrial revolution in the 18th century. 5. Describe Ferguson’s ‘five steps’ in the link between war, finance and inflation. Untitled ECON2050 MONEY AND FINANCE PRACTICE QUESTIONS (WEEK 3) True/False Questions 1. Whatever forms money might be, they are just tokens of money and they have value because of the social arrangements each implies. 2. An IOU is just a contract between two parties and it is not money. 3. Money is incarnate desire. 4. Finance is a projection into the unknowable future. 2 5. Financial markets such as bond markets and stock markets are the channels in which both direct and indirect financing take place. 6. So-called ‘primary’ securities markets are mostly critical in providing liquidity. 7. Bitcoin is money as you can use it to make payments. 8. Commodity money existed only in the ancient ages. --------------------------------------------------------------- 3 Short-answer Questions 1. Through the story of Irish bank closure, explain the nature of money as transferable credit. 3. Why have there been hostility towards bankers and financiers? 4. Discuss the interconnectedness between the ‘medium of exchange’ and ‘store of value’ functions of money. 5. With the help of examples in financial markets, distinguish between: (i) Primary market and Secondary market (ii) Organized exchange and OTC