QUESTION 1: to pay for virtual acquisitions online. While many of its users and supporters call bitcoin “money”, several US regulatory agencies have recently denied bitcoin the currency status, the Commodities and Futures Trading Commission calling it, in a September 2015 decision, a “commodi...
MACROECONOMICS
Q&A
QUESTION 1: Bitcoin, a peer-to-peer network launched in 2009, used a virtual currency, named Bitcoin,
to pay for virtual acquisitions online. While many of its users and supporters call bitcoin “money”,
several US regulatory agencies have recently denied bitcoin the currency status, the Commodities and
Futures Trading Commission calling it, in a September 2015 decision, a “commodity”. What do you
think? Why wouldn’t bitcoin qualify as money?
QUESTION 2: Since you’re studying abroad for a year, your parents have just sent you a lump sum
payment of $12,000 on the savings account you just created in your new country of residence, advising
you to transfer equal sums each month to your new checking account, which you just started doing.
How have M1 and M2 affected in your new country of residence? How are they affected by the end of
your stay abroad?
QUESTION 3: Imagine that as a result of a grave economic crisis, a country’s citizen’s trust in the financial
system in general and the central bank in particular rapidly deteriorates. As a consequence, more and
more cash payments end up being hidden in personal safes rather than being transferred to savings or
checking accounts. How would that change the money supply in that country?
QUESTION 4: After suffering two years of staggering hyperinflation, the African nation of Zimbabwe
officially abandoned its currency, the Zimbabwean dollar, in April 2009 and made the US dollar its
official currency. Why would anyone in Zimbabwe be willing to accept US dollars exchange for goods
and services?
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