Question

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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