Ch16-HW
1) In US history, has M1 ever been larger than M2?
2) Your friend dares you to burn a $100 bill (which is illegal). If
the required reserve ratio is 15%, what would the change in money supply be?
3) Review “No Place Like Home” in the March 21, 2002 edition of The Economist. Why is it important that
the Federal Reserve is divided into several small branches? What implications
does this have for other central banks, such as
4) A) Paper money is generally more susceptible
to inflation than commodity money is. Why?
B) What
are some other costs and benefits of commodity money?
5) A lot of Paul Krugman’s
Aug 13, 1998 article “Baby-Sitting
the Economy” is out of date. However, much of it remains quite informative.
A) What type of money do the baby-sitting coupons
represent?
B) Discuss how effective the coupons are in
fulfilling the official functions of money.