Humanities Homework Help

PART 1: 

Choose one question from below

It should include at least one reference from reputable sources (peer-reviewed journal articles and/or published books). 

1. You are the owner of a small sandwich shop. A buyer may offer one of several payment methods: cash, a check drawn on a bank, a credit card, or a debit card. Which of these is the least costly for you? Explain why the others are more expensive. (LO2)

• 2. Explain how money encourages specialization and how specialization improves everyone’s standard of living. (LO1)
• 3. Could the dollar still function as the unit of payment in a totally cashless society? (LO2)  
• 4. Give four examples of ACH transactions you might make. (LO2)

5. Despite the efforts of the United States Treasury and the Secret Service, someone discovers a cheap way to counterfeit $100 bills.  What will be the impact of this discovery on the economy? (LO3)

6. Under what circumstances might money in the form of currency be the best option as a store of value (an asset that maintains its value)? (LO1)

7. Life insurance companies tend to invest in long-term assets such as loans to manufacturing
firms to build factories or to real estate developers to build shopping malls and skyscrapers. Automobile insurers tend to invest in short-term assets such as Treasury bills. What accounts for these differences? (LO3)

8. Car insurance companies sell many policies. Explain how this practice minimizes their risk. (LO5)

PART 2:

Responding Posts

Reply to at least one classmate’s post. Your response to your classmate’s discussion needs to be substantive by adding something new to the original comment.

Responding Posts should include a level of depth that enriches the discussion (i.e., reflection on their response, application of their comment to the workplace, reference to the literature, etc.). 

CLASSMATE’S POST (Manuel)

Could the dollar still function as the unit of payment in a totally cashless society? (LO2) 

I believe that we are heading into an era where cash will no longer be needed. If you think about it, monetary systems have evolved from commodity based currency, such as gold, silver and salt, for instance, in which the actual coins (or bags of salt) had intrinsic value. Then the US established the a gold standard, in which paper money could be exchanged for gold at the Federal Reserve, and finally we have come to a system that is a 100% fiduciary system, in which members of society trust that the government guaranties the validity of the US dollar, although it is not backed by gold reserves and no one can exchange money for gold at the FED anymore. It was in 1971 when President Nixon announced that the US was dropping the gold standard.

So, since 1971 we have used paper money to receive our salaries and pay our bills and, more importantly, our taxes. The dollar bill per se, has no intrinsic value, it’s only worth a dollar because everyone else will accept the dollar as a form of payment. The key element here, in my opinion, is that we can all pay our taxes with dollars, we can’t pay taxes with Euros, gold, or even less, Bitcoin! So, as long as the government demands that taxes are paid in dollars, we will all have to convert our money to US dollars to pay our taxes. This is the first reason why the dollar will continue to be used in the future.

Second reason why the dollar will still function as the unit of payment in a totally cashless society is that the government treasury bonds are denominated in US dollars, so savers will need to have savings in dollars to be able to purchase these bonds and, as we all have learned recently, the market for US treasuries is immense.

The third reason is that the government along with the FED is the creator of the American dollar and both institutions have total control of the monetary system that is, they can create new money, and they control the interest rates on dollar denominated savings and loans in the market. If the government were to accept other forms of currency in a cashless society, it would start losing control over the monetary system, and it would diminish its power. Hence, the government has been trying to stop cryptocurrencies from becoming mainstream, so far, it would seem that is not winning that battle as digital currencies are becoming more and more popular.

Other reasons may include the trust that is put on the dollar in global markets, for instance about 75% of all forex exchange includes the US dollar on one side of the transaction and the barrel of oil is quoted in dollars all over the world. It seems very difficult to forgo the dollar as the main currency to be used as a measure of account in a cashless society. Time will tell how things will turn out and I believe the market will have a strong influence as to how the new monetary systems evolves in the future.

References: 

• Ella Lee. (2020, July 27). USA today . Retrieved from https://www.usatoday.com/: https://www.usatoday.com/story/news/factcheck/2020…
• Ross, S. (2021, June 18). Investopedia. Retrieved from Investopedia: https://www.investopedia.com/articles/forex-curren…