1. (11.4) Which of these is money: a credit card; lunch vouchers; a portfolio of
ID: 1130431 • Letter: 1
Question
1.
(11.4) Which of these is money: a credit card; lunch vouchers; a portfolio of blue-chip equi- ties; a $100,000 revolving credit line; a $100 dollar bill in Moscow; one million Russian rubles in New York; one million Russian rubles in Des Moines, Iowa?
2.
(10.1) Some of the things that governments spend money on are luxury goods (goods for which the proportion of people’s—or governments’—income that is spent on them is likely to rise as income grows). Health care and education may be such goods. If most goods that a government provides are of this type, the pressure for the share of government spending in total GDP to rise over time will grow. Should such pressures be resisted?
3.
(10.6) Consider the initial situation shown for the two economies in Table 10.5. Using a spreadsheet, calculate the evolution of the stock of debt, debt interest payments, and the overall decit if interest rates are 4% rather than 3%. How much lower would the initial stock of debt need to be for the second country to generate a constant ratio of debt to GDP with a 4% interest rate?
4.
(19.2) What does the increasing impact of the Internet imply for the law of one price?
5.
(19.3) You have been hired as a statistician by an international economic institution and asked to construct estimates of PPP exchange rates. What data do you need and what prob- lems would you expect?
Explanation / Answer
Answer for 11.4
Money has following functions
Store of Value
Medium for exchange
Unit of Count
Hence all these options fit in money.
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