Question: As an alternative to the economy depicted in Figure suppose

As an alternative to the economy depicted in Figure, suppose that there are three types of people, but now the person who consumes good 1 produces good 3, the person who consumes good 2 produces good 1, and the person who consumes good 3 produces good 2.
(a) Determine who trades what with whom if good 1 is used as a commodity money, and compare this with what happens when good 1 is used as a commodity money in the economy in Figure. Explain.
(b) Determine who trades what with whom if fiat money is used in exchange, and commodity money is not used. Explain.



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  • CreatedDecember 05, 2014
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