12 Questions
What item did people use for money over the broadest geographic area and for the longest period of time in history?
Cowries
When did cowries start serving as money in China?
700 B.C.
In which markets were cowries widely used for exchange?
Southern Europe
What made cowries an effective form of money according to the text?
Durability
When were cowries still acceptable as a means to pay taxes in certain African nations?
Early 1900s
What region was the main source of cowries used as money?
Maldives Islands
What was one advantage of using cowrie shells as money?
They were durable and could not be easily damaged.
How were cowrie shells used for large purchases?
By measuring the weight or volume of the total shells.
What was one advantage of using cowrie shells over metal coins?
It was impossible to counterfeit cowrie shells.
What role did governments play in the use of cowrie shells as money?
They tightly controlled the supply of cowrie shells.
What is the primary focus of the study of macroeconomics?
Promoting economic growth, low unemployment, and low inflation.
What are the two main categories of macroeconomic policy discussed in the text?
Fiscal policy and monetary policy.
Study Notes
Defining Money
- Money has taken many forms throughout history, from cowrie shells to cryptocurrency.
- The cowrie shell was used as money over the broadest geographic area and for the longest period of time, serving as a means of exchange from 700 B.C. in China to the early 20th century in certain African nations.
Characteristics of Cowrie Shells as Money
- Cowrie shells are extremely durable, lasting a century or more.
- They can be used by counting shells of a certain size or by measuring the weight or volume of the total shells.
- Counterfeiting cowrie shells is impossible, unlike gold or silver coins which can be copied with cheaper metals.
Control of CowrieSupply
- Governments, such as the Portuguese, Dutch, and English, tightly controlled the collection of cowries, ensuring the supply grew quickly enough to serve commerce but remained scarce.
Macroeconomic Analysis
- The discussion of money and banking is central to macroeconomic analysis.
- Macroeconomic goals include economic growth, low unemployment, and low inflation.
- Macroeconomic frameworks include Keynesian and neoclassical approaches, which can be embodied in the aggregate demand/aggregate supply (AD/AS) model.
- Macroeconomic policy categories include monetary policy (focusing on money, banking, and interest rates) and fiscal policy (focusing on government spending, taxes, and borrowing).
Test your knowledge on the chapter objectives related to money and banking with this trivia question. Learn about defining money by its functions, measuring money, the role of banks, and how banks create money. Discover the many disguises of money throughout history.
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