List and explain the three functions ot'n'ioney in a modern economy. How does at money differ from commodities like gold and silver that were used as money? How is the M2 money supply defined? Recall the discussion in the chapter about the \"quantity theory ot'money." a. Explain the quantity theory ot'rnoney. b. Explain how the predictions of the quantity theory ot'moncy are home out by historical data. What are the differences among ination, deation, and hyperination? What is the rnost common cause ofhypcrination? What are the costs associated with ination? Does ination have any benets? Explain. Money makes a variety ot'econon'iic transactions possible. In the following three situations, determine whether money is involved in the transaction. a. 1n prison camps during World War [1, and in some prisons today, cigarettes circulate among prisoners. For example, a cell phone might cost six hundred cigarettes, whereas a magazine might cost only two cigarettes. Discuss whether cigarettes are fulfilling all three functions ofmoney in this case. b. Over the past 5'0 years, credit cards have become an increasingly popular way for people to purchase goods and services. Are credit cards money? Explain your reasoning. e. Many people have retirement savings accounts, in which they hold stocks and bonds. Do these balances constitute money? Why or why not?