TCH303 – MONEY AND BANKING
MOCK EXAM
Duration: 60 minutes
The exam consists of two (02) parts and lasts 60 minutes. DO NOT OPEN the exams until you are
told to do so and STOP writing when you are told that the exam is over. Failure to comply will
result in a 10% loss in the grade. This is a CLOSED BOOK exam.
SECTION A (Short Questions): 6 points
A1. Short questions (3 points)
Answer three (03) questions in this section. Each question in this section is worth 1 point.
1. Why have some economists described money during a hyperinflation as a “hot potato” that is
quickly passed from one person to another?
Answer: During hyperinflation your money is not worth anything so people prefer to be paid in
goods and supplies instead of paper money. You describe it as a “hot potato” because if you have
your hands on something hot you pass it on to someone else. Hyperinflation is a wasteful game of
“hot potato” because that is exactly what people do with their money, they pass it over to someone
else. They use up valuable resources trying to avoid holding on to paper money. Supplies have a
bigger value than money during hyperinflation. You can’t really buy anything for the money you
have so you can just pass them over to someone else instead.
