Week 2

Question 1

Inconvertible paper fiat money has value because of

A. the prospect of its eventual redemption in gold or silver

B. the attractiveness of its design

C. government legislation declaring it to be of value

D. the relation between its nominal supply and the demand for real money balances

E. None of the above: inconvertible paper fiat money can never have any value

Answer 1

D. the relation between its nominal supply and the demand for real money balances

Question 2

The US was on a legally bimetallic but de facto silver standard during

Answer 2

A. 1792-1834

Question 3

According to Gresham’s Law

Answer 3

B. If two moneys are both legal tender at a fixed ratio, the overvalued money tends to drive the undervalued money out of circulation

Question 4

From 1834 to 1933, the US mint price of gold was

Answer 4

C. $20.67/oz.

Question 5

From 1834 to 1873, the US Mint Ratio was

Answer 5

B. 16:1

Question 6

Currently, the ratio of the market price of gold to that of silver is approximately

Answer 6

70:1

Question 7

In L. Frank Baum’s 1900 book The Wonderful Wizard of Oz, Dorothy’s magic shoes are

Answer 7

silver