Money and economic

Money and economic

Order Description

This TMA is an essay based on chapters 13, Economics and Economic Change text book. It is marked out of 100 and is worth 20% of the overall assessment component. This TMA requires you to examine the unemployment policy, assess its cost and discuss the economic implications of such policies.
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Do We Still Need the Fils, Piaster, or Penny?

We have seen that fiat money has no value except as money. Governments actually make a profit from issuing fiat money because fiat money is usually produced using paper or low-value metals that cost far less than the face value of the money. For example, it only costs about four cents to manufacture a US$20 bill. The government’s profit from issuing fiat money- which is equal to the difference between the face value of the money and its production cost – is called seigniorage.

With small-denomination coins – such as a fils or piaster or a penny-there is always the possibility that the coins will cost more to produce than their face value. This was true in the early 1980s when the rising price of copper meant that governments were spending more than a fils. Piaster, or a penny to produce each of these coins. That led some governments, such as the U.S. government, to switch from making pennies from copper to making them from zinc. Unfortunately, by 2007, the rising price of zinc meant that once again, the penny cost more than one cent to produce, let alone coins made of copper, many economists began to ask whether the penny, fils, or piaster should simply be abolished. Not only do they cost more to produce than they are worth, but inflation has eroded their purchasing power to such an extent that some people find the fils or piaster to be a nuisance. Seeing a Bahraini 5-fils or Egyptian piaster coin on the sidewalk, many people will walk on by, not bothering to pick it up. In fact, most, if not all, Arab countries, including Egypt, Bahrain, the UAE, and Kuwait among others, have eliminated their lowest-denomination coins.

Some economists, though, have argued that eliminating the fils or piaster would subject consumers to a ‘rounding tax’. For example, a good that had been priced at EGP 2.99 will cost EGO 3.00 if the Egyptian piaster is eliminated. As in most Arab countries, it seems very likely that penny in the U.S. will also vanish from the U.S. money supply, as did the fils and the piaster.
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Sources: R.G. Hubbard, et al, Economics, Pearson Co., England, 2011; and Robert Whaples, “Why keeping the Penny No Longer Makes Sense,” USA Today, July 12, 2006.
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The TMA
This TMA requires you to write a structured essay of no more than 1500 words, in which you attempt to answer the following questions:
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Discuss and analyze how money is measured in your country today?
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Explain the role of fiat money in your country’s economy. Do you agree with the above article that fiat money should be eliminated?
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Guidance notes for TMA:
The above questions should be discussed based on what you learned in Ch. 11, section 3: Money and the Economy listed in your course materials DD202B. You are going to discuss the theoretical concepts of money and its role in the economy. You can use your text book to refer to this theoretical background or use references from e-library. The challenge in your essay is to cover its most significant aspects within the specified word count. Your essay should be well organized in three parts, an introduction, a body and a conclusion.
In your introduction, you need to summarize the difference between commodity money and fiat money and discuss the different functions of money. Your introduction, as well as other parts of your TMA, must be based on up-to-date data with complete references. It is probably best to spend no more than 300 words on this part. (15 points)
In the body of your essay, you need to answer the above two questions. To further clarify your analysis, you will need to utilize some macroeconomic data to support your discussion. You should spend no more than 500 to 600 words on this part of the TMA. (40 points).
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In your conclusion, try to consider and summarize the most important role of the central bank of your country. (25 points)
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The assessment of the quality of your essay will be based on how you convince the reader (grader) about your knowledge and understanding of the topic. Attempt to use your own words and avoid using a copy-paste.
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1.reference page in a separete page
2.introduction required.
3.conclusion required.
4.harvard style referencing intext and on the back.
4.my country is kuwait so please go through kuwait cental bank page to complete the required questions.

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