Question

1. When Argentina was a Dutch colony, it used the guilder (Dutch currency).  The guilder was directly redeemable for gold. This is an example of what kind of money?

Fiat, Barter, Commodity, or Representative money?

2. Oil was poised to become an essential contributor to Argentina's economic health in 2020.  However, the collapse of the global price of oil has threatened to push Argentina into a recessionary gap. If the government of Argentina wanted to use FISCAL policy to prevent the recession while also causing the smallest increase in the deficit, it should

a. decrease taxes.

b. buy government securities.

c. decrease the required reserve ratio.

d. increase spending.

Answer 1

1> Representative Money

Representative Money were those which has no intrinsic value but can be exchanged for a commodity which has intrinsic value. On the other hand, commodity money were those type of monetary units which has inherent value. Here, it is an example of representative money.

2> d. increase spending.

Buying security and decreasing RR ratio are monetary policies and decreasing taxes or increasing spending are fiscal policies, Here, decreasing tax will cost a large increase in the deficit, so d is the correct option.