A plan having a similar purpose in view is that of readjusting the official amount of gold in the gold dollar from time to time so as to keep the value of the gold dollar constant. This plan does not contemplate the recoining of gold coins or the changing of the actual amount of bullion in the dollar. It would leave the size of the dollar the same as at present but it would provide that the holder of the coin or of a gold certificate could present the gold coin or gold certificate at the treasury and receive for it gold bullion, not at the rate of 23.22 grains of gold to the dollar, but at such a rate that the amount of gold bullion which would be paid for the gold coin or the paper money would have a constant value. The variation in the amount of redemption gold to the gold dollar would be determined by a system of index numbers of prices after the plan proposed for the multiple standard.

Questions

1. What is meant by barter? Why is barter often inconvenient?

2. Define money.

3. What are the functions of money?

4. Name some commodities other than the metals and paper which have served as money.

5. What qualities are to be found in a good money material? Explain.

6. Why are coins stamped and milled?

7. What is the origin of the term seigniorage? What is brassage? What is seigniorage?

8. What is meant by free coinage? Is there free coinage of gold in the United States? Is there free coinage of silver?

9. Name the coins of the United States.

10. What is meant by standard money? By token money? By credit money? By representative money?

11. Name the different kinds of money in circulation in the United States.

12. What is meant by legal tender? Which kinds of money are legal tender in this country and to what extent?

13. What is Gresham's law? Explain why it is true.

14. Upon what does the value of money depend? What is the effect upon prices of an increase in the value of money?

15. Upon what factors does the demand for money depend? The supply of money?

16. State Professor Fisher's equation of exchange. Explain its meaning.

17. What is the quantity theory of money? The cost of production theory? Is it possible to harmonize the two theories?

18. What is bimetallism? What advantage was claimed for it? Why has the importance of this advantage declined in recent years?

19. What is the purpose of index numbers of prices? Explain their construction.

20. Why is a multiple standard of value desired?

21. Explain the principle of the compensated dollar.

Supplementary Reading

Fisher, The Purchasing Power of Money, Chap. ii. Holdsworth, Money and Banking, Chaps. i.-vi. Johnson, Introductory Economics, Chap. xv. Seager, Principles, Chap. xix. Seligman, Principles, Chaps. xxviii. and xxix. Taussig, Principles, Chaps. xvii. and xviii.