Question

1. An individual is holding an ancient coin and claims that he got money. Discuss whether his claim is true or false? State your justification. (10 points)

2. What do you mean by money has “intrinsic value”? (10 points)

3. An individual has Centurion® Card from American Express (credit cards). The credit card is most valuable credit card in the world. Can this individual claim that he/she is a wealthy individual? (10 points)

Answer 1

1> No, it is false. That individual is wrong to claim that it is money. The reason is that money is supposed to be accepted by the general population as the mean of trade, an ancient coin is no longer accepted to be a mean of trade, so it is no longer money.

2> Money has intrinsic value in the sense that money is made out of something e.g. paper, gold, silver, other metals etc. All of these are goods which can be sold in the market. This value of the material of the money is called the intrinsic value of money.

3> No, he can not claim that he is an wealthy individual by having a credit card because credit card is not money, it is considered a method to delay your payment i.e. you pay with the credit card now and then you pay to the credit card issuer later. So, he can not claim that he is a wealthy individual.