Monetary Economics (ECS3701) Selected Examination Questions and suggested solutions 2023

According to Smith, how does the debasement of coins affect individuals? - -Debasement of coins leaves individuals with less value. Each coin they have is worth less because there is less precious metal in the actual coin, allowing the issuer to repay debts incompletely. -What were the twin weaknesses of the U.S. financial system that produced banking panics in the 19th and early 20th centuries? - -Banks were divided by state lines and unregulated shadow banking industry emerged -Among the four functions of money that Jevons describes, which does he believe is the essential function of money? - -The most important function of money is that it eliminates the coincidence of wants, generally accepted medium of exchange -What does Radford mean when he says that cigarettes were subject to the working of Gresham's Law? - -Gresham's law states that the more valuable currency will be withheld from circulation, as individuals will want to hold on to it. In this case, the nicer brands of cigarettes were withheld from circulation in the POW camps because people wanted to smoke them, not use them as currency.