Question

ework: chapter 14
k to assignment
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1. the makings of a good currency

at first, it might seem that valuable commodities like cattle or lead bars might be good forms of money. what makes paper money preferable to these alternatives?
○ it is divisible (unlike cattle) and easily portable (unlike lead bars).
○ it has more intrinsic value than cattle or lead.
○ it is less likely to be stolen.
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Explanation:

To determine why paper money is preferable to cattle or lead bars as money, we analyze each option:

• Option 1: Paper money is divisible (cattle can’t be easily divided into smaller units for transactions) and portable (lead bars are heavy and hard to carry), which matches the properties of good money.
• Option 2: Paper money has little intrinsic value (it’s a fiat currency), while cattle/lead have more inherent value, so this is incorrect.
• Option 3: Paper money is not inherently less likely to be stolen (valuable items like money are targets), so this is incorrect.

Answer:

A. It is divisible (unlike cattle) and easily portable (unlike lead bars).