[Legacy] Money
11 questions· page 1 of 2
Describe, using Fig. 1.1, the immediate impact of demonetisation on India’s M1 money supply.
Explain a possible reason why India’s M1 money supply increased early in 2017, as shown in Fig. 1.1, after the most used bank notes were withdrawn from circulation.
Explain how the Indian government’s decision to withdraw the two most used bank notes is likely to affect the use of cash as a store of value in India over time.
Explain what represents money in a modern economy and how the use of contactless payments without the use of cash will affect the functions of money.
Explain the characteristics that money needs to have in order to perform its functions effectively.
Explain what is used as money in a modern economy. Consider how an increase in the money supply can cause inflation.
Explain how the functions of money are affected when there is a high rate of inflation in an economy.
Explain what is used as money in a modern economy and how an increase in the quantity of money can cause prices to rise.
Explain what acts as money in a modern economy and what is likely to happen to the price level if the quantity of money increases significantly.
Discuss whether the estimated rate of inflation in Venezuela will allow the bolivar to continue to perform all of its functions as money.