1. Money solves the problem of double coincidence of wants that would regularly occur under a system of _______.

2. Gold is a good example of fiat money. _______ (True/False)

3. Deposits in checking accounts are included in the definition of money because they are a very liquid asset. _______ (True/False)

4. The largest component of M2 is deposits in _______.

5. Money market mutual funds are hard to classify in a definition of money because they are only held to facilitate transactions. _______ (True/False)

6. So much U.S. currency is in global circulation because it is a safe asset compared to assets denominated in foreign currency. _______ (True/False)

7. Debit Cards. In recent years, debit cards have become popular. Debit cards allow the holder of the card to pay a merchant for goods and services directly from a checking account. How do you think the introduction of debit cards affected the amount of currency in the economy? How about the amount of checking account deposits?

8. Gift Cards. Gifts cards have grown in popularity as a mechanism to give gifts. Cards are available for popular book stores and for coffee shops. Should these gift cards be considered part of the money supply? How do they differ from traveler s checks?

9. California Money? In 1992, the state of California ran out of funds and could not pay its bills. It issued IOUs, called warrants, to its workers and suppliers. Only large banks and credit unions accepted the warrants. Should these warrants be viewed as money?

10. Credit Cards. Why aren’t traditional credit cards parts of the money supply?

11. Inflation and Currency Held Abroad. Suppose inflation in the United States rose to around 7 percent a year. How do you think this would affect the demand for U.S. currency by foreigners? 

12. Currency and Underground Economy. Search the Web for articles on currency and the underground economy. How have various authors used estimates of currency to measure the underground economy?