Economics Exam C
At the end of 2008, the government held debt of $350 billion, collected tax revenue of $50 billion, and spent $75billion. The national debt at the beginning of 2009 is:
$375 billion.
What is the equilibrium level of output in the simple Keynesian model (fixed price model) if there are the following types of spending. Consumption = 200 + 0.75 Yd (remember disposable income is equal to income after taxes. Investment Spending = 100 Government Spending = 50 and there are no taxes or net exports.
1400
Why does AD or AS shift? What is the effect of shifting these curves? What is stagflation? Why does it occur?
AD can shift due to changes in consumer spending, business investment, government spending, and net exports. Factors such as changes in consumer confidence, fiscal policy, monetary policy, and global economic conditions can influence AD. AS can shift due to changes in factors affecting the overall productivity of the economy. These factors include changes in technology, labor force skills, natural resource availability, and institutional factors. Government policies, such as taxation and regulations, can also impact AS. An increase in AD typically leads to higher output and employment in the short run. However, if the economy is already operating near its full capacity, an increase in AD may primarily result in higher prices (inflation). A decrease in AD can lead to lower output and employment, potentially causing a recession. Conversely, if the economy is overheated, a decrease in AD might reduce inflationary pressures. An increase in AS, reflecting improvements in productivity or favorable supply-side factors, can lead to higher output and employment with lower inflation. A decrease in AS, reflecting reduced productivity or adverse supply-side shocks, can result in a decrease in output and employment with higher inflation (stagflation). Stagflation is an economic condition characterized by a combination of stagnant economic growth (low or negative output growth) and high inflation. This phenomenon contradicts the traditional Phillips curve, which suggests an inverse relationship between inflation and unemployment. Stagflation is a challenging scenario for policymakers because traditional Keynesian or monetary policies may be less effective in addressing both issues simultaneously.
What is fiscal policy? (Expansionary and Concretionary) -- do they directly affect the debt?
An expansionary fiscal policy lowers tax rates or increases spending to increase aggregate demand and fuel economic growth. A contractionary fiscal policy raises rates or cuts spending to prevent or reduce inflation.
What is the QUANTITY THEORY OF MONEY AND WHAT DOES IT IMPLY ABOUT INCREASING THE MONEYSUPPLY? WHY?
An increase in the money supply ( ) without an increase in output ( ) causes the price level to change by the same change in the money supply.
Legal Tender
Any kind of money that a creditor must by law accept in payment for debts
What does Art Laffer think? What was different about marginal tax rates in 1980 as opposed to today?
Art Laffer has been a proponent of lower tax rates, particularly arguing that reducing tax rates, especially on high-income individuals and businesses, can stimulate economic growth and, under certain conditions, lead to increased government revenue. Laffer's key idea, famously represented by the Laffer Curve, suggests that there is an optimal tax rate at which tax revenue is maximized, and moving beyond this point may lead to lower revenues due to reduced economic activity. In the United States, marginal tax rates were notably higher in the early 1980s compared to today. During the presidency of Ronald Reagan in the 1980s, there were significant tax cuts as part of Reagan's economic policy, often referred to as Reaganomics. The top marginal income tax rate was reduced from 70% in the early 1980s to 50% in 1982 and eventually to 28% by the end of the decade.
Was GDP growth in 2021 expected to be above or below normal growth? Why is this? What happened to theeconomy in 2020 in the USA?
CBO projections made in February 2021 were less pessimistic, showing GDP 2.3 percent below the pre-pandemic projection at the end of 2021.
What is the biggest recent example of Keynesian economics at work? Was this a good policy? (That is a normativequestion but you should have some views on the pros and cons of using these policies and how recent policies borrowedfrom Keynesian ideas)
COVID-19 Pandemic (2020-ongoing): In response to the economic fallout from the COVID-19 pandemic, many countries adopted Keynesian-like policies. Governments engaged in massive fiscal stimulus measures, providing financial support to individuals, businesses, and healthcare systems to counter the negative economic effects of lockdowns and reduced economic activity.
Differentiate between the short run and the long run (slope of aggregate supply curve in the Classical model (long run) inthe short run model (typical) and in the "full multiplier" Keynesian model).
Classical Model (Long Run): Vertical or nearly vertical aggregate supply curve in the long run, indicating that changes in the price level do not affect output or employment in the long run. Typical Short-Run Model: Upward-sloping aggregate supply curve in the short run, reflecting the assumption of sticky wages and prices. "Full Multiplier" Keynesian Model: Horizontal aggregate supply curve in the short run up to the full employment level of output, emphasizing that changes in aggregate demand primarily affect output rather than prices in the short run.
What are the biggest criticisms of Keynesian economics?What happens to GDP (using the multiplier effect) if Government Spending and Taxes increase by the same amount?
Critics argue that the multiplier ignores how governments finance spending by taxation or debt issues.
What is Currency Debasement? When/where has that occurred?How did the Gold Standard work?
Currency debasement refers to the intentional lowering of the intrinsic value of a country's currency. This can be achieved by reducing the amount of precious metal (such as gold or silver) in the coins or by decreasing the metallic content of banknotes. Debasement is often driven by economic factors or the need for the government to finance its expenditures, especially during times of war or financial crisis. The gold standard was a monetary system in which the value of a country's currency was directly tied to a specific quantity of gold.
How big of a problem is cyclical unemployment right now? What about inflation?
Cyclical unemployment is typically associated with the business cycle and fluctuates as the economy goes through periods of expansion and contraction. During economic downturns, cyclical unemployment tends to rise as businesses cut back on production and hiring. Conversely, during economic upswings, cyclical unemployment tends to decrease as businesses expand operations. Inflation is the rate at which the general level of prices for goods and services is rising, eroding purchasing power. Central banks, such as the Federal Reserve in the United States, often target a specific inflation rate as part of their monetary policy.
Suppose the Fed sells $1000 worth of bonds to a commercial bank. Also suppose the reserve requirement is 25%.We expect the money supply to ______________ by ____________ if the money multiplier is in effect.
Decrease $4,000
When there is a decrease in the economic activity in Japan according to our typical short run aggregate supplyaggregate demand model price levels tend to _____ while the unemployment rate will tend to ______ in the United States.
Decrease, increase
What is the name of the interest rate from which one commercial bank borrows directly from the Fed? Did the Fedencourage or discourage banks from using this source of funds in the wake of Lehman Brothers failing and the advent ofthe "Great Recession".
Discount Rate, The Fed encouraged the use of the "Discount Window"
Why do economists spend so much time comparing North and South Korea? What does this "prove"?Is income inequality ALWAYS a bad thing? Why or why not?
Economists often compare North and South Korea as a unique case study to explore the impact of different economic systems on the development and prosperity of nations. The Korean Peninsula provides a particularly interesting comparison because it was once a single, homogeneous country that split into two distinct entities with vastly different economic and political systems: North Korea, a centrally planned economy with a focus on state control, and South Korea, a market-oriented economy with a greater emphasis on private enterprise.
Which of the following forms of money is a part of M1 but not a part of M2? a. Savings Accounts b. Currency in circulation c. Demand Deposits d. Money Market Mutual Funds e. Everything that is a part of M1 Money must also be a part of M2 money
Everything that is a part of M1 Money must also be a part of M2 money
True or False: Studies have shown that in countries where Central Banks have more independence from politicaldecision makers inflation rates tend to be higher.
False
True or False: Suppose that I decided to transfer $1000 from my checking account to my savings account at my local bank. As a result of this transaction M1 would not change.
False
True or False: The largest single source of tax revenue for the United States government comes from corporateincome taxes.
False
What was quantitative easing?
Fed purchases of long-term Treasuries and Mortgage Backed Securities once short term rates were pushed to 0 (liquidity trap) ZIRP (zero interest rate policy) intended to lower long-term interest rates and provide support (liquidity) to the Treasury and Mortgage backed market
What happened to the reserve requirement and the M1 Money supply in 2020 and why?
For example, in response to the COVID-19 pandemic, governments increased the M1 money supply, making it easier to come about capital to help stimulate the economy, keep workers employed, and encourage business activity.
What did Milton Friedman think about prohibition?
Friedman opposed the prohibition of drugs and argued that it had negative consequences, both socially and economically. He believed that individuals should have the freedom to make choices about their own lives, including decisions related to drug use, as long as they did not directly harm others.
We know the aggregate demand curve is downward sloping because certain types of spending tend to increase whenprice levels fall. What is the one type of spending that is not expected to change as price levels fall. (Think about thereasons the demand curve is downward sloping)
Government
What is the relationship between central bank independence and inflation?
In a now famous article that was published in 1993, Alesina and Summers found that developed (advanced) countries with high levels of central bank independence also experienced lower average levels of inflation from 1955-1988.
What are some of the problems with using cows as money?What about cigarettes or cans of mackerel?
In summary, while these items might have intrinsic value and have been used in certain contexts as forms of currency (e.g., in prison economies), they are not well-suited to function as efficient, standardized, and widely accepted mediums of exchange in broader economic systems. Modern currencies, whether physical or digital, are designed to address these practical challenges and facilitate smooth transactions within an economy.
Differentiate between the short run and the long run (slope of aggregate supply curve).
In the long run, the aggregate supply curve is vertical, but in the short run, it is upward sloping.
Understand what is different about a shift in aggregate demand in the long run.What is stagflation? Why does it occur?
In the long run, the classical view of the economy suggests that wages and prices are flexible and can adjust to changes in demand. In this context, a shift in aggregate demand (AD) in the long run is expected to primarily impact the price level without a significant effect on the level of output or employment. Stagflation is an economic condition characterized by a combination of stagnant economic growth (low or negative output growth) and high inflation. This situation is counterintuitive based on traditional economic theories, such as the Phillips curve, which posits an inverse relationship between inflation and unemployment. Stagflation poses a challenge for policymakers because the typical tools used to address inflation (e.g., monetary tightening) may exacerbate the economic slowdown, and measures to boost output (e.g., fiscal stimulus) may worsen inflationary pressures.
What is IORB? How has monetary policy changed in recent years?
It's important to note that the specific strategies and tools employed by central banks can vary based on economic conditions, policy frameworks, and the unique challenges faced by each central bank. For the latest and most accurate information on monetary policy changes, it is advisable to refer to official statements and publications from central banks and relevant financial institutions.
Who is the current Chairman of the Fed Board of Governors?
Jay Powell
What did Keynes think caused the Great Depression?Would Milton Friedman agree with this? Would F.A. Hayek?
John Maynard Keynes, a prominent economist, offered his analysis of the causes of the Great Depression in his seminal work, "The General Theory of Employment, Interest, and Money," published in 1936. Keynes argued that the Great Depression was primarily caused by a severe and prolonged deficiency in aggregate demand. Friedman, along with Anna Schwartz, presented an alternative explanation for the Great Depression in their influential work, "A Monetary History of the United States, 1867-1960" (1963). Friedman and Schwartz argued that a contraction in the money supply by the Federal Reserve was a crucial factor in the severity of the Depression. They contended that the Fed's failure to prevent a banking collapse and its subsequent contractionary monetary policy aggravated the economic downturn. F.A. Hayek, a key figure in the Austrian School of Economics, also had a different perspective. Hayek argued that the Great Depression was a result of the unsustainable boom created by excessive credit expansion during the 1920s. He attributed the subsequent bust to the necessary correction of the malinvestments and distortions in the economy.
If the Federal Reserve wanted to combat unemployment what combination of policies could they use?
Lower the Discount Rate, Lower the Reserve Requirement or Buy Bonds
When the economy falls into a recession, which of the following actions is most likely by the FED?
Lower the IORB
M1 (what is it and how large is it) M2 (what is it and how large is it)Are credit cards a part of M1 or M2?
M1 includes the most liquid forms of money. It consists of currency in circulation (physical cash) and demand deposits, which are checking account balances that can be accessed on demand. Currency in circulation (physical cash). Demand deposits (checking account balances). M2 is a broader measure of the money supply than M1. It includes all components of M1 and adds other types of near-money or less liquid assets. All components of M1. Savings accounts. Time deposits (certificates of deposit or CDs) with values less than $100,000. Money market mutual funds held by individuals. Credit cards are not included in either M1 or M2. The reason is that when you use a credit card, you are essentially accessing a line of credit rather than using money that is immediately available. The money spent using a credit card becomes part of the money supply when the credit card holder pays the credit card bill, converting the credit card debt into a transaction in the broader monetary system.
In the "Survivor" video we showed in class, we assumed that the U.S. Dollar functioned best as ___________ because the prices were unpredictable and the money could not be used in the context of the game after the auction ended.
Medium of Exchange
What other functions does it serve?Makeup of the FOMC and Board of Governors including number of Governors and length of term.
Members of the FOMC and the Board of Governors are chosen with a goal of representing a diversity of perspectives and experiences to ensure a well-rounded and informed approach to policymaking. The independence of the Federal Reserve is intended to insulate it from short-term political pressures and allow it to focus on its dual mandate of price stability and maximum sustainable employment.
menu costs and winners and losers with unexpected inflation
Menu costs refer to the expenses that businesses incur when changing prices. In the context of inflation, these costs arise because prices need to be adjusted more frequently. For example, businesses may need to update their printed menus, catalogs, price tags, and advertising materials. The term "menu costs" is metaphorical, representing the broader idea that any business that regularly updates prices incurs costs associated with these changes. Winners: Debtors and Asset Owners Losers: Fixed-Income Receivers, Savers, and Lenders
What is monetary policy? (Expansionary and Concretionary)—do they directly affect the debtWhat are inside and outside lags?How are they a problem with fiscal and monetary policy|?
Monetary policy refers to the actions taken by a country's central bank (such as the Federal Reserve in the United States) to control the money supply and interest rates in order to achieve specific economic goals. The two main types of monetary policy are expansionary and contractionary. Monetary policy can indirectly affect government debt. For example, during expansionary monetary policy, lower interest rates may reduce the cost of servicing existing government debt, as the government can refinance at lower rates. However, prolonged periods of low-interest rates may also contribute to higher levels of debt accumulation if governments are more inclined to borrow when interest rates are favorable. Inside Lags: Refers to the time it takes for policymakers to recognize the need for a policy change and actually implement it. For example, there may be delays in recognizing an economic downturn and deciding on an appropriate response. Outside Lags: Refers to the time it takes for the implemented policy to have its full effect on the economy. For monetary policy, this lag could be the time it takes for interest rate changes to influence spending and investment in the economy.
Traditionally, what happened when the Fed increased or decreased the money supply?
Opposite effects occur when the supply of money falls or when its rate of growth declines. Economic activity declines and either disinflation (reduced inflation) or deflation (falling prices) results.
in question #8 Government spending increased by an additional 50 dollars and we used the full spending multiplier how much would we expect output to increase or decrease by?
Output would increase by 200
You have been asked to identify each of the twelve central banks in the Federal Reserve System. What resourcewould be the most useful that would help you answer this question?
Owning fifty one dollar bills
What makes up MONEY DEMAND?Understand both the speculative and transactions demand for money.
People hold money in order to buy goods and services (transactions demand), to have it available for contingencies (precautionary demand), and in order to avoid possible drops in the value of other assets such as bonds (speculative demand).
You should be able to solve for equilibrium output in the Keynesian Model given a consumption function and other typesof spending (consumption, government, and net exports)
Practice Problems
The U.S. could reduce its budget deficit by
Raising the eligible age to receive Social Security benefits
Why are some nations wealthy while others are not? (Conditions for economic growth that are necessary)
Scholars have proposed numerous explanations for what increases a country's level of economic wealth, including free trade, more investment, temperate climate, good health, high education, financial market.
Which forms of money do not have intrinsic value (both forms of money must not have intrinsic value to be correct)?
Schrute Bucks and the U.S. Dollar
What is the primary purpose the Fed was originally supposed to serve (and is still its most important role)?
Serve as a Lender of Last Resort
________ would be hurt by unexpected inflation
Someone who loaned money out at a fixed interest rate.
When interest rates decrease the _________ demand for money ____________.
Speculative, increases
How would we classify the stimulus spending passed in 2020? What might these policies be expected to do to aggregate supply or aggregate demand?
Stimulus spending is typically a fiscal policy tool used by governments to boost economic activity during times of recession or economic downturn. The specific effects on aggregate supply and demand can depend on the nature of the stimulus measures and the broader economic context.
Suppose that Hyperinflation exists in Econland. What function of money (that is an actual function of money) is affected the most by this hyperinflation? We would say in this case that money is a very bad ____. (choose your best answer)
Store of Value
What is the idea behind supply side economics? What are some criticisms of this approach?What is the Laffer Curve?What do most economists feel is the optimal top tax rate to maximize a nation's revenues?
Supply-side economics is an economic theory that emphasizes policies to stimulate economic growth by increasing the supply of goods and services. The core idea is that by lowering tax rates, especially on businesses and high-income individuals, and reducing regulations, the government can incentivize investment, production, and job creation. The belief is that these policies will lead to increased productivity, economic expansion, and ultimately higher government revenues through a broader tax base. The Laffer Curve is a graphical representation of the relationship between tax rates and government revenue. It suggests that there is an optimal tax rate that maximizes revenue, and that both extremely high and extremely low tax rates can result in lower government revenues. The concept was popularized by economist Arthur Laffer. Opinions on the optimal top tax rate vary among economists, and it often depends on specific economic conditions, the structure of the tax system, and policy goals. There is no consensus on a single optimal top tax rate. However, many economists agree that tax systems should be designed to balance the goals of promoting economic growth, ensuring fairness, and providing sufficient revenue for government functions.
Using a credit card is most like
Taking out a short term loan from a bank
What you need to know about the tax multiplier
Taxes will REDUCE spending and output according to the Keynesian model. As a matter of fact, if government spending increases by the same amount as taxes, the consumption effects cancel each other out. In other words in the full multiplier model there is a BALANCED BUDGET MULTIPLER, if G goes up by $100 and T goes up by $100 the net change in output is expected to be an increase of $100 only.
Understand everything about the policies implemented by the "Volcker Fed" and how that is relevant today! Why wasthis so important for the long term health of the US Economy?
The "Volcker Fed" refers to the tenure of Paul Volcker as the Chairman of the Federal Reserve from 1979 to 1987. Paul Volcker is renowned for implementing a series of monetary policies that played a crucial role in combating high inflation in the United States during the late 1970s and early 1980s. The policies he pursued were instrumental in restoring price stability and establishing the foundation for the long-term health of the U.S. economy. Overall, the policies implemented by the Volcker Fed were crucial in breaking the inflationary spiral of the late 1970s and early 1980s, setting the stage for a prolonged period of economic stability and growth in the United States. The experience of the Volcker era continues to inform discussions on the role and responsibilities of central banks in maintaining a healthy and stable economy.
Understand why the classical economic model is so different from the Keynesian Model.
The Classical Model involves economic growth in the long run, while the Keynesian Model involves economic growth in the short run.
How did the Fed control the money supply?
The Fed controls the supply of money by increas- ing or decreasing the monetary base.
What can the Fed do to the Discount/Fed Funds Rate?
The Federal Reserve increases or decreases the discount rate (and the federal funds rate target) in order to curtail or stimulate the overall level of economic activity in the country.
Details about the FED!!!!!What is the Fed and what is its most important role?How did it execute that role in the Great Depression?What about the Great Recession and during the COVID crisis of 2020?
The Federal Reserve, often referred to as the Fed, is the central banking system of the United States. It was created by the Federal Reserve Act in 1913 and is composed of twelve regional banks, known as Federal Reserve Banks, and the Board of Governors. The Fed's primary objectives are to conduct monetary policy, ensure the stability of the financial system, and support economic growth and full employment. The Fed is granted a significant degree of independence to carry out its responsibilities. The Fed's actions during these crises highlight its role as a lender of last resort and its ability to implement a range of monetary tools to address economic challenges. The lessons learned from past crises have influenced the Fed's approach to policy, emphasizing the importance of proactive and decisive measures to support economic recovery and financial stability.
Understand the basics of the Keynesian Economic Model? Who was Keynes?What was his most famous work? What was his most famous saying? What does that mean?
The Keynesian economic model is based on the ideas of John Maynard Keynes, a British economist who revolutionized economic thought during the early 20th century. The Keynesian model focuses on the role of aggregate demand in influencing economic output and employment. John Maynard Keynes (1883-1946) was a British economist whose ideas had a profound impact on economic theory and policy. His most famous work is "The General Theory of Employment, Interest, and Money," published in 1936. This groundbreaking book challenged classical economic thought and laid the foundation for Keynesian economics. Keynes's most famous saying is often paraphrased as "In the long run, we are all dead." This expression is a condensed version of a statement from his book "A Tract on Monetary Reform" (1923). This saying reflects Keynes's emphasis on the short run and the idea that policymakers and economists should focus on addressing immediate economic challenges rather than waiting for long-term equilibrium. In times of economic distress, waiting for markets to naturally adjust to full employment might not be practical, and intervention may be necessary to address immediate problems. The quote underscores Keynes's advocacy for active government involvement to manage economic fluctuations and stabilize employment levels.
Where are the 12 Fed Central Banks?
The Reserve Banks are decentralized by design and are located in Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco.
How does the U.S.A. rank in terms of Economic Freedom (approximately)? Why is this important?
The United States' economic freedom score is 70.6, making its economy the 25th freest in the 2023 Index.
Understand the basic theory of Robert Solow.
The basic theory of Solow is the Solow residual.
What is the Discount Rate? What is the Federal Funds Rate? Why are they different? What is the current FF Rate?
The discount rate is the interest rate at which eligible financial institutions (mostly commercial banks) can borrow funds directly from the Federal Reserve's discount window. This is a tool used by the Federal Reserve to influence short-term lending and borrowing between banks and, consequently, the overall money supply in the economy. The discount rate is typically higher than the federal funds rate, reflecting the fact that borrowing from the discount window is considered a less desirable option and is generally used as a last resort by banks facing liquidity issues. The federal funds rate is the interest rate at which banks lend money to each other overnight in the federal funds market. It is a key benchmark for short-term interest rates in the broader financial system. The Federal Reserve influences the federal funds rate through its open market operations, buying and selling government securities in the open market to either increase or decrease the supply of money in the banking system. As of my last knowledge update in January 2022, I don't have the real-time data for the current federal funds rate. The federal funds rate is set by the Federal Open Market Committee (FOMC) during its meetings, and it can change based on economic conditions and the monetary policy stance of the Federal Reserve. For the most current information, it is advisable to check reliable financial news sources or the official communications from the Federal Reserve.
Which of the following would be the most likely to cause inflation in the United States, a country that uses fiatmoney?
The government decides to print more money
What event occurred in the 1990's that caused both inflation and unemployment to decrease?
The information technology revolution
What are the three functions of money?Hyperinflation (how it affects the functions of money)
The main functions of money include storing the value of assets and savings, it is a medium of exchange, and it is a unit of account. The hyperinflation rate undermines money value hence making savings depreciate their value.
You should also know about the current monetary policy being implemented in the USA and understand whypaying Interest on Reserve Balances is an effective tool to implement monetary policy.
The payment of interest on reserve balances is a key component of the Federal Reserve's toolkit for implementing monetary policy. The Federal Reserve sets the target federal funds rate, which is the interest rate at which banks lend to each other overnight. By influencing the federal funds rate, the Fed aims to achieve its dual mandate of stable prices and maximum sustainable employment.
Importance of Aggregate Supply/Aggregate Demand Curves. Why is AD curve sloped the way it is. (Wealth, Net Export and IR Effect). Why is the AS curve sloped the way it is.
This downward slope indicates that increases in the price level of outputs lead to a lower quantity of total spending.
Is prohibition "good"?
Though the advocates of prohibition had argued that banning sales of alcohol would reduce criminal activity, it in fact directly contributed to the rise of organized crime.
True or False: Banks in the United States (where we follow the fractional reserve system of banking) aresusceptible to bank "runs" where we might expect for banks to not have enough reserves to meetthe demands of their depositors which could make them insolvent unless the Fed or anotheroutside source steps in to lend funds.
True
True or False: Fiscal policy has longer "inside" lags than monetary policy in the United States because Fed decision makers are typically able to implement policy changes more quickly than the President and Congress.
True
True or False: Lowering taxes is best described as an EXPANSIONARY FISCAL policy.
True
If govt. spending goesup by $500 and the MPC =0.75 what happens to GDP given the multiplier effect?
With a government spending increase of $500 and an MPC of 0.75, the resulting change in GDP, taking the multiplier effect into account, would be $2000.
What is a moral hazard problem?
a problem that arises when people don't have to bear the negative consequences of their actions
Which of the following will not increase short-run aggregate supply?
an increase in the money supply
current inflation and unemployment rates
inflation rate = 3.24% unemployment rate = 3.8%
Fiat Money
money that has value because the government has ordered that it is an acceptable means to pay debts
Commodity Money
objects that have value in themselves and that are also used as money
Intrinsic Value
value independent of any benefit to humans
