Sample Economics Paper on Reaction Report

Reaction Report

The island of stone money is a fascinating case to reflect on when thinking about money and the responsibility it plays towards economic as well as social dealings of a society. To begin with, Yap is a small island situated in the Pacific Ocean and economists like it as it helps to know what money is all about. There is no silver or gold in this island, but decades ago, explorers came across limestone deposits, which they calved making large stone discs and carried along with them. It is not very clear if these carvings started to be used as money, however, to some extent, people on this island recognized what most communities require. They required something that everybody agrees one can use paying for things. For the last few centuries, the people in Yap have been using such huge stone wheels referred to as rai to execute certain exchanges. They started to use this kind of money when the rulers of this island had struggles for power while all kinds of merchandise were utilized as valuables, such as turmeric and shells. Therefore, bringing this stone that was not present in Yap looked very attractive and qualified to be used as money. In addition, the stones were highly polished making them look more valuable.

Reports say that money in Yap was in the form of large round stones that had no practical use. Based on this report, economists concluded that stone money was fiat money. Fiat money refers to something that has no use, not convertible and has no legal status. However, these stones were exclusive and were brought from far-away islands. The residents imported them since they believed to have better aesthetic value, thus acceptable for payments of tax as well as making legal tender. In this case, it is right to say the stones were commodity money.