Whatever Happened To Penny Candy Ch 2

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Questions and Answers

What was the primary reason the Roman government resorted to counterfeiting?

To raise taxes without public backlash

To obtain money without increasing taxes (correct)

To improve the quality of their currency

To avoid the costs of minting new money

What was the process used by the Roman government to counterfeit coins?

Creating entirely new types of coins

Printing new money with a printing press

Clipping the edges of existing coins (correct)

Melting down coins and adding more metal (correct)

What effect did the clipping of coins have on their acceptance by the Roman people?

The government increased the value of the coins

It increased the value of the coins

People accepted the clipped coins without question

People began hoarding high-silver coins (correct)

How did Gresham's Law manifest in the context of Roman currency?

Bad money drove good money out of circulation Signup and view all the answers

What percentage of silver was in the denarius in 218 A.D.?

43% Signup and view all the answers

What happened to the silver coins after the U.S. debased its currency in the 1960s?

They became more valuable than clad coins Signup and view all the answers

Why did the Roman government face challenges in raising taxes?

High taxes led to civil unrest and revolts Signup and view all the answers

What does the term 'double-digit inflation' signify?

Prices are rising at a rate of 10 percent or more each year. Signup and view all the answers

Which of the following is a form of welfare as described?

The government provides funds to large corporations. Signup and view all the answers

What economic law did the Roman government come up against?

Tanstaafl. Signup and view all the answers

In the context, what does Tanstaafl imply?

Every beneficial action requires payment or sacrifice. Signup and view all the answers

Which aspect of Roman life is notably mentioned as a cause of inflation?

Public works and welfare programs. Signup and view all the answers

During which periods did western civilization primarily experience double-digit inflation?

The 1970s and early 1980s. Signup and view all the answers

What is the analogy used to describe the concept of Tanstaafl?

You get what you pay for. Signup and view all the answers

What was one of the historical contexts compared to modern inflation in the content?

The Roman Empire. Signup and view all the answers

Study Notes

Roman Inflation and Counterfeiting

Double-digit inflation plagued Western civilization (including Japan) in the 1970s and 1980s, with prices rising by 10% or more annually.
Similar widespread inflation occurred in the Roman Empire.
Inflation and recessions are recurring economic issues, not modern phenomena. The Greeks faced similar problems centuries before the Romans.

Roman Government Finances

Roman government, like modern governments, had public works, wars, and welfare programs.
Welfare programs give aid to the poor, while subsidies aid the wealthy. The Romans faced economic limitations (tanstaafl) regarding funding their projects.
The concept of "tanstaafl" (There Ain't No Such Thing As A Free Lunch) emphasizes that nothing is free; resources and services require compensation.
The Roman government financed its activities primarily through taxation.

Tanstaafl and Counterfeiting

Tax increases led to public discontent and potential revolts.
To avoid higher taxes, the Roman government resorted to counterfeiting.
Counterfeiting involved altering coins (clipping or debasing) to increase the money supply.

Coin Alteration and Debasing

Roman coins, primarily the denarius, were made of 94% silver initially.
The government clipped coins (shaving edges), melted them down, added base metals, or reduced the silver content to create more coins without increasing taxes.
This process progressively lowered the silver content of coins.
A denarius, originally at 94% silver, fell to 43% silver by 218 AD, and to less than 1% shortly after.
The public recognized reduced silver content and saved high-silver coins, hoarding them.
This process demonstrates Gresham's Law: bad money drives out good money, as people preferred to spend the circulated debased coins.

Modern Relevance

Similar economic practices have occurred in modern times.
The United States experienced a decline in the silver content of coins starting in 1965.
This created a surplus of low-value coins.
People hoarded the high-silver coins, leading to a shortage of those coins.

Coin Reeding and Recognition

In later centuries, notches (reeding) were added to coin edges to detect clipping
This practice is also used on modern dimes, quarters, and half-dollars.

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Description

Explore the economic issues faced by the Roman Empire, including inflation and counterfeiting. This quiz delves into government financing, the impact of taxation, and the principles behind welfare programs. Understand the historical context of economic challenges that continue to resonate today.