3-Task 1 Money, Foreign Exchange, Finance.

 

Name: Juan Carlos Ibarra Gaspar

Nua: 117230

 

Watch the video, answer the following questions.

 

1. How are money and currency defined?

Currency is a medium of exchange, a unit of account, portable, durable, divisible, fungible which means that each unit is the same as the next. It is also interchangeable. Money is all those things plus a store of value over a long period of time. Sometimes it is hard to comprehend the difference between these two. The currency in your pocket is a medium of exchange. It is a unit of account because it has got numbers on it.

 

2. What are the differences between currency and money?

Money must be a store of value and maintain its purchasing power over long periods of time.

3. What are their most important characteristics?

·       Medium of exchange

·       Unit of account

·       Portable

·       Durable

·       Divisible

·       Fungible

·       Store of value over a long period of time

4. What is a Fiat currency?

Currencies that are unbacked by gold or silver, and they have all gone to zero. It’s a 100 percent failure rate. It is a currency created by their government. In other words, its worthless paper.

5. What are its characteristics?

·       Everyone went to zero.

·       Created by the government.

·       Worthless paper

 

6. What is money and currency used for?

Money and currency are used to exchange goods of value with each other.

7. What does “store of value” refer to?

An asset that maintains its value, rather than depreciating. Gold and silver are good stores of value because their live shelfs are essentially perpetual. It is all based on its purchasing power.

8. What was the currency used in the past?

Currency was used in the past as a form of trading with each other for goods and services.

9. What is the most beautiful way of money?

It was said that the most beautiful way of may was gold and silver, because it doesn’t loose its purchasing power and it is almost impossible to replicate and make more of it.

10. What is a “solving system”?

A solving system is a system that looks at the aspect of printing more money and being just fine.

11. What happens when governments expand the currency supplies?

When the government expands the currency supplies it causes inflation and the purchasing power decreases over time.

12. What is barter?

No currency or money, it was an exchange of just goods and services. There was no specific value, more of a gut feeling of what things were worth. People exchanged what they had with what they needed.  

13. What is Quantity of Easy?

Quantity of easy is the increase in paper money over a period.

14. What is the tendency of QEs around the world?

The amount of money available in each country is has increased drastically over just a short period of time. Their purchasing power decreases because of how much money is in circulation. It causes inflation.

 

 

Write a final reflection on the topic, mentioning what were the most important aspects you learned.

The difference between currency and money is an important concept that we do not want to get confused. The aspect that paper currency is worthless, is scary, almost every country if not all countries base their economy around paper currency or the so-called fiat currency. From what I learned from the video, the American dollar has one of the highest inflations, this is due because they print excessive amounts of money and then they ship it out. In other words they ship out their inflation to the rest of the world and this will eventually come back and affect the American economy.