CONCEPT OF MONEY AND CURRENCY

Question 1

Early Forms of Money

Answer 1

Cattle: In ancient civilizations, cattle were a
valuable asset widely used as currency.

Cowrie shells: These small, durable shells, found in abundance in the Indian and Pacific Oceans.

Whale teeth: In Fiji, whale teeth were used as a form of currency, reflecting the importance of whaling in their culture.

Rai stones: On the island of Yap, massive
circular rocks, some weighing several tons,
served as currency

Question 2

The Rise of Metal Money and Coinage

Answer 2

• Standardization
• Durability
• Portability

Question 3

The Evolution of Paper Money and Fiat Currency

Answer 3

The first known paper banknotes appeared in China during the reign of Emperor Zhenzong (997-1022 CE). These notes, made from the bark of mulberry trees, were initially issued by bankers as receipts for deposited coins.

Question 4

The Digital Age of Money:
Cryptocurrencies and Beyond

Answer 4

The 21st century has witnessed the emergence of crypto currencies, digital currencies that operate independently of central banks and governments

Question 5

Kinds and Characteristics of Money

Answer 5

1. Commodity Money
2. Fiat Money
3. Representative Money
4. Digital Money
5. Near Money

Question 6

Theories of Money

Answer 6

1. The Quantity Theory of Money (QTM)
   - states that the price level in an economy is directly proportional to the quantity of money in circulation.
2. The Chartalist Theory of Money
   - also known as the state theory of money, argues that money is a creation of the state and its ability to tax and spend

Question 7

Monetary Policy

Answer 7

is the set of actions undertaken by a
nation’s central bank to manage the money supply and credit conditions to achieve specific economic objectives

Question 8

Monetary Policy

Answer 8

1. Interest Rate Targeting
2. Unconventional Monetary Policy
3. Expansionary Monetary Policy
4. Contractionary Monetary Policy

Question 9

Goals of Monetary Policy

Answer 9

1. Price Stability
2. Maximum Sustainable Output and Employment
3. Moderate Long-Term Interest Rates
4. Balancing Multiple Goals
5. Stimulating Economic Growth