2/16/07 9:53 AM

The paper currenct did not depreciate against specie. In an extreme case, RI currency depreciated against specie 26:1 £1=$26 erhode island dollars a market starts to develop for a foreign exchange th Pennsylvania currency did not depreceiate as badly about £3:$1 a conflict between the currency’s face value and its market value became an issue and did impede on trade but the colonies did manage in the end, there was not a shortage of monety in th colonial era as first thought because the colonists used substitutes for specie in addition, •the colonial economy was able to grow in real terms •long term prices were increasing and shortage of currency would cause prices to fall currenct would cause prices to fall •interest rates were not extremely high and usury laws did not have to be enacted •*it was the first tie sicne 1500 that a western nation used paper currency successfully* Comparative advantage and profitability •Virginia/ Maryland both were comparatively advantaged in wheat and tobacco , but, profits were greater in growing tobacco, Virginia/ Maryland grew tobacco eve at the risk of starvation •Assumption : cost remains constant oprice of both tobacco and wheat is $10 oprice of tobacco increases to $20, what happens graphically and explain verbally both tobacco and wheat production o

Verbal explanation: Price of tobacco increases, that cause farmers to produce more and is represented by a movement along the supply curvec called a change in quantity supply • Because the price of the related good has increased , which are substitutes, the supply curve shifts in and this is called a change in supply

some important features of the american revolutionary war 2/16/07 9:53 AM
after the war, we write the articles of confederation -> constitution the constitution has a big impact on property rights and businesses it represented the tradition to modern liberalism •the idea of competitive individualism free enterprise ad limited government •loss of british military assistance judicial/government expertise and financing of wars othis meant economic consequences of taxes •with regards to slavry odenounced it ocalled for its eventual elimination but did not state when and how it was going to be done oagaain, economics overrides social/ppolitical equality Land laws •problem: what to do with the land that lay northwest of the ohio river? •answer:Land ordinance og 1785/87 •the idea was tha land east of the Mississippi river and northwest of the ohio river should be sold off to pary for the national debt •the land would be surveyed before sale and settlement. This would abvoid confusion and lawsuits •congeress of the confederation passed a foresighted piece of legislation the land called the old northwest would be public domain and acquired rom the states •divided townships sectioned off in 6X6 mile sections of one mle each based on colonial Vermont •one suare mile would be sused forpublic services •dealt with some very important issues for the new nation odealt with stathood. First the federal governmnt would establish land as a territory. One 60,000 people woud become a state othere would be free states, a farsighted provision olaid the furture for capitalism because the land oassed into private hands and simultaneously solved the problem that arises with public lands oprovide a great source of financing by selling the land and delaying having a federal income tax oable to pay soldiers who fought in the revolutionary war oprovided for expansion of American democracy

2/16/07 9:53 AM

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