1. (18 points) a Consider a Treasury bond initially issued with a 5% coupon rate. It has a maturity value of $1000. Could it be used as money in today's economic environment? Explain by addressing how well or poorly it could perform each of the three functions of money. Liabilities plus Capital IOUS $1000 Assets Gold inventory Gold coins Other assets $5000 $2000 $4000 Capital $10,000 b. The balance sheet above reflects the business of a hypothetical 1600s goldsmith similar to the example we considered in class. Gold serves as money in this economy. In circulation is gold coinage issued by the king. For the sake of this example, assume that all prices are in dollars ($). The goldsmith, as a favor to local businesses, allows them to keep their gold coins in his vault for safekeeping. He has accepted $1000 in gold coins, giving the local businessmen 1.0.U.s as evidence of the deposit. We saw that it was possible for the l.O.U.s created by the goldsmith to serve as money in this economy. Would an LO.U. be considered to be commodity money, representative money, or fiat money? Explain. Describe a transaction the goldsmith, a private business, could engage in that would result in the creation of money. 1. (18 points) a Consider a Treasury bond initially issued with a 5% coupon rate. It has a maturity value of $1000. Could it be used as money in today's economic environment? Explain by addressing how well or poorly it could perform each of the three functions of money. Liabilities plus Capital IOUS $1000 Assets Gold inventory Gold coins Other assets $5000 $2000 $4000 Capital $10,000 b. The balance sheet above reflects the business of a hypothetical 1600s goldsmith similar to the example we considered in class. Gold serves as money in this economy. In circulation is gold coinage issued by the king. For the sake of this example, assume that all prices are in dollars ($). The goldsmith, as a favor to local businesses, allows them to keep their gold coins in his vault for safekeeping. He has accepted $1000 in gold coins, giving the local businessmen 1.0.U.s as evidence of the deposit. We saw that it was possible for the l.O.U.s created by the goldsmith to serve as money in this economy. Would an LO.U. be considered to be commodity money, representative money, or fiat money? Explain. Describe a transaction the goldsmith, a private business, could engage in that would result in the creation of money