An exam question about money
Any I0U (I owe You – get it?) that is accepted in payment for services rendered can be regarded as money. There is a legendary exam question about a traveller who paid for a meal on a remote island by cheque. The natives were so impressed by this strange piece of paper that they passed it from hand to hand without anyone attempting to cash it. Who then paid for the traveller’s meal?
Now consider this!
A tourist arrives in paradise with a pocketful of Euros. As soon as he sets foot in the arrival lounge he is told – by way of a big sign displayed over the conveyor belt where he goes to collect his luggage – that he must not exchange his Euros with anyone except an authorised dealer. Following the official instructions he instantly exchanged all his Euro notes at a bank on the concourse.
As soon as the bank has bought the Euros, the bank manager orders that they be re-sold only to those Seychellois who plan to travel abroad, even though in Seychelles there is an acute shortage of essential goods which we normally imported– and the importers have deposited millions of rupees with the same bank in the hope of obtaining some foreign currencies to pay suppliers abroad.
That evening, armed with his rupees the tourist goes and spends them on a sumptuous meal at a prime restaurant. The restaurant takes the rupees to the shop keeper to buy the ingredients needed to prepare the next meals. The shop keeper goes to the bank to pay for the goods the restaurant has just bought from him but the bank says he must wait three years to get foreign exchange. So when the tourist spends the rupees the bank has given him in return for the Euros in his pocket, who really pays for his meals in paradise?