There are three types of money: commodity money, commodity - backed money, and fiat

Chapter 0, Problem 6

(choose chapter or problem)

There are three types of money: commodity money, commodity - backed money, and fiat money. Which type of money is used in each of the following situations? a. Bottles of rum were used to pay for goods in colonial Australia. Interest rate, p. 222 Savingsinvestment spending identity, p. 222 Budget surplus, p. 223 Budget deficit, p. 223 Budget balance, p. 223 National savings, p. 223 Capital inflow, p. 223 Wealth, p. 224 Financial asset, p. 224 Physical asset, p. 224 Liability, p. 224 Transaction costs, p. 225 Financial risk, p. 225 Diversification, p. 225 Liquid, p. 226 Illiquid, p. 226 Loan, p. 226 Default, p. 226 Loan-backed securities, p. 227 Financial intermediary, p. 227 Mutual fund, p. 228 Pension fund, p. 228 Life insurance company, p. 228 Bank deposit, p. 229 Bank, p. 229 Money, p. 231 Currency in circulation, p. 231 Checkable bank deposits, p. 231 Money supply, p. 231 Medium of exchange, p. 232 Store of value, p. 232 Unit of account, p. 233 Commodity money, p. 233 Commodity -backed money, p. 234 Fiat money, p. 234 Monetary aggregate, p. 234 Near -moneys, p. 235 Present value, p. 239 Net present value, p. 240 Bank reserves, p. 243 T-account, p. 243 Reserve ratio, p. 244 Required reserve ratio, p. 244 Bank run, p. 246 Deposit insurance, p. 246 Reserve requirements, p. 246 Discount window, p. 246 Excess reserves, p. 249 Monetary base, p. 249 Money multiplier, p. 250 Central bank, p. 253 Commercial bank, p. 257 Investment bank, p. 257 Savings and loan (thrift), p. 257 Leverage, p. 258 Balance sheet effect, p. 258 Vicious cycle of deleveraging, p. 258 Subprime lending, p. 259 Securitization, p. 259 Federal funds market, p. 263 Federal funds rate, p. 263 Discount rate, p. 263 Open -market operation, p. 264 Short-term interest rates, p. 269 Long-term interest rates, p. 270 Money demand curve, p. 270 Liquidity preference model of the interest rate, p. 273 Money supply curve, p. 273 Loanable funds market, p. 277 Rate of return, p. 278 Crowding out, p. 281 Fisher effect, p. 283 Key Terms Summary 291 b. Salt was used in many European countries as a medium of exchange. c. For a brief time, Germany used paper money (the Rye Mark) that could be redeemed for a certain amount of rye, a type of grain. d.The town of Ithaca, New York, prints its own currency, Ithaca HOURS, which can be used to purchase local goods and services