Question

In 1988, the Australian Treasury introduced a commemorative $10 banknote made of plastic (polymer).

a. Australia’s commemorative $10 banknote is an example of _____ money.

barter, fiat, or commodity?

b. Australia’s commemorative $10 banknote is included ________ of Australia’s money supply.

exclusively in the M1 component, exclusively in the M2 component, or both?

Answer 1

Answer Australia’s commemorative $10 banknote is an example of fiat money

The passing of the Australian Notes Act of 1910, which assigned responsibility for the issue of banknotes to the Commonwealth Treasury, however, made it an offence for any bank to circulate banknotes issued by a State and withdrew their status as legal tender. Further, the issuing of banknotes by private banks was effectively discouraged by the Bank Notes Tax Act, also of 1910, which imposed a tax of 10 per cent per annum on all banknotes issued.

Part b)Australia’s commemorative $10 banknote is included in both M1 and M2 of Australia’s money supply.