Ch 2

1. Items such as cacao became forms of near-money. What is the key characteristic of near
money that distinguishes it from actual commodity money?

It was used to balance out an exchange

2. Which of the following has not been widely used as commodity money?

Oranges

3. The origin of the word capital is derived from which of the following?

Cattle

4. The use of deerskin was once used as commodity money. What modern monetary term is
derived from this?

Buck

5. Which of the following was NOT considered to be a "liquid" item of barter

Wood

6. Which of the following is NOT considered a significant limitation of barter?

Devaluation

7. In order for something to be used as a common trade item it must...?

Have value

8. A person only has a new car to trade for a steak dinner. He finds someone offering a steak
dinner that is also interested in obtaining a new car? What is the problem these people face?

Indivisibility dilemma

9. Money itself:

Both b. and c.

b. enables us to obtain things that satisfy our desires and needs

c. is any object that people widely agree to use as a medium of exchange

10. What was the main reason the concept of money was created?

To overcome the limitations of barter

Rocks would be the best option because they would remain over time. They are made of a
resistant material that does not deteriorate. They also have some of the characteristics of
money like highly portable, durable, and acceptable compared to the other listed items.
There are great variety of types of rocks, different monetary denominations can be placed,
which would differentiate them and facilitate purchases and payments in the country.

Apples are highly perishable; pigs are bulky and not portable, and cigarettes are not
acceptable to all members of a given society. Rocks are also preferred because they can be
used for deferred payments, can be used as a measure of value, and can be stored
compared to the other options.