| This question <86|86> overall <109|111> Hans: <109|113>. |
| Exam Question 58: Explain the following sentence in the text: “Jacob questions whether gold has ever been paid for at its full value.” |
| [110] Hans: Jacob's question In [86], Alf brings two reasons why “gold has never been paid for at its full value.” His first reasion is wrong and the second is right. The first reason is: |
| Unlike a diamond, the production process of gold is more advanced technology wise. |
| If the productivity of mining gold is more advanced, then the value of gold is lower. This would be an explanation why the value of gold is what it is, not why the price of gold is below its value. |
| Alf's second reason is right: |
| One must also realize that gold has always been used as a medium of exchange, and the metal is found more abundant in the market today. |
| So much gold has been mined, because of the monetary functions of gold, that there is far too much gold around in relation to the nonmonetary needs for gold. Keynes called it a “barbarous relic”, and Lenin thought one should use all this gold to gold-plate the pissoirs for the workers in Moskow and elsewhere. |
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