1) . Find an example of something people historically used as money (some examples: cowries, cigarettes, Rai stones). In 100-300 words evaluate how well it has served each of the three functions that makes it a candidate for money (e.g., "it works as a store of value very well, because...").

2) Consider a new deposit to the Canadian banking system of $10,000. Suppose that all commercial banks have a target reserve ratio of 20% and there is no cash drain. The following table shows how deposits, reserves, and loans change as the new deposit permits the banks to "create" money

Round Deposits Reserves Ratios 1st $10,000 $2000 $8000 2nd $8000 $1600 $6400 3rd $6400 $1280 $5120 4th $5120 $1024 $4096 5th $4096 $819.2 $3276.8