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Economics/ATM Accepting Coins Currency ?.


QUESTION: Dear Prof Dr Raza

Assuming that $50, $100 are manufactured as coins then can ATM Machine accept (input) and output to the Customer who wants to withdraw money in the forms of coins ?.

Awaiting your reply,

Thanks & Regards,
Prashant S Akerkar

ANSWER: Hi Prashant,

It is unlikely there would be ATM booths where customers could withdraw money from in high-denomination coins, since high-denomination coins, as I have explained in the previous answer to your question, are not going to be on a country's monetary agenda.

However, supposing there were such coins in circulation in any country for any financial reason whatsoever, your question does merit a strong answer. The answer, I believe, is yes --customers would be able to withdraw money in coins from ATM booths --for the following reasons.

First, an ATM booth normally caters to withdrawal up to certain small sums. If the paper bills could be coming down the chute, coins could equally easily do.

Second, a machine can dispose of coins easily. Think of subway coins instead of tickets in any large city that are dispensed by automatic stand-alone machines in response to paper bills put into the slots. The machine immediately checks with its sensors the genuineness of the paper bills and returns coins in the equation of paper bill=(price of coins)X (number of coins). Quite the same, an ATM machine can check for the name in the plastic card through its sensor and okay the transaction within the limit of the card-holder's money balance once the PIN entered matches.

Third, ATM transaction requires more security than does coin purchase. But that is no problem. This is for the security of the customer's bank balances, and that works even if he were to purchase items at a grocery store. This makes getting coins through the ATM slots secure and easy.

Finally, the ATM disposing of coins would probably be even smoother and with less hassle than that of disposing paper bills. The reason for this can be fathomed from what happens in gambling booths. Say, you are in Atlantic City, U.S.A., just playing in a machine. Small-denomination gains come easily from the machine clinking down. When you hit a jackpot, for example, then you go through some other procedure for getting the stacks of U.S. dollar bills.

So, Prashant, you can take it for granted that, were there 50- or 100-dollar coins in circulation, you could easily withdraw in coins your money from an ATM booth!

I hope this serves as one of the answers to your question. Best.

---------- FOLLOW-UP ----------

QUESTION: Dear Prof Raza

Thank you.

Here the challenging aspect would be segregation of coins value kept in the ATM Machine ?. i.e. Rs 1, Rs 10, Rs 50, Rs 100, Rs 500, Rs 1000, RS 5000 etc in coins similar to paper notes currency.

There could be two drawers within ATM machine one each for paper currency notes and one for coins ?.

If a customer wants to withdraw money from ATM Machine, Then  there could be output of notes and coins both, only notes, only coins.

Awaiting your reply,

Thanks & Regards,
Prashant S Akerkar

Hi Prashant,

My feeling is, if any coin machine can clank out coins of particular denominations, such as does subway-coin vending machine, the a machine can equally well clank out coins of different denominations through one single chute. How? Let's check that mathematically.

First, assume there are coins of N denominations: N = 1, 10, 50, etc., in circulation in the country. Also assume there is paper money in circulation of different denominations, M. So our money in the hypothetical model are:

Money = N + M,   N= 1, 10, etc., and M= 1, 10, etc.

Second, suppose there are two kinds of machines, machines for clanking out coins and machines for whisking out paper bills. There may be N such machines for clanking out N such particular coins. This is simple enough. One machine will bring out Rs 1 coins, another Rs. 10 coins, and so on. There is no problem, since every coin-giving machine would work with the simple technology of a subway-coin vending machine. So, with no technological problem, we end up with N coin-giving machines. There are:\

Machine 1 (for one-rupee coins) + Machine 2  (for 10-rupee coins) + ...+ Machine 7 (for 5000-rupee coins)

How will these coin-giving machine work efficiently?

Well, as soon as a customer asks for an amount of money to be withdrawn, the machine will prompt the question: CHOOSE THE DENOMINATIONS ONE BY ONE AND CLICK "OK"

The customer will press, say, 5 and 0, to get in 50-dollar denominations, and then click "OK"

The machine will ask :NEXT?

The customer will similarly answer by pressing the digits and the "OK" button.

The machine will again ask: NEXT?

Suppose the customer has already asked all the denominations in which he want to withdraw the money, he can then again press "OK".

If there are mistakes, the machine will ask for "WRONG, CHOOSE AGAIN, AND PRESS "OK".

If the customer does his arithmetic right hits "OK" again, the machine will say "WAIT"


The machine sensors send signals severally to each of the "chosen" machines. In the SECOND stage, those machines severally send separately the "chunks" of coins of different denominations to different "slanted" trays like TRAY 1, TRAY 2, etc., for the particular-denomination coins.Then in the THIRD stage, all these coins "slope down" into a SINGLE runway TROUGH leading to one chute that opens up to one tray in front of the customer.

Simultaneously, the machine sensors also send signals to the paper-bill machines, and similarly the paper bills come gliding down the paper TRAYs through the paper TROUGH and at one common point MEET the coins on the same chute and out in front of the customer.

Hence, coins and paper bill running like roller coaster from different machines BEHIND THE PROTECTED WALL come whooshing down in one SINGLE tray in front of the customer. There are so many things working behind view --machines, trays, channels, and chute --that the customer is not supposed to know, just as when a person becomes angry and charges the opponent and people can see only he is "charging," and they are not supposed to know what goes behind all this: the anger spurts adrenalin from the cortex of the kidneys, that sends signal into the brain, that sends hormones to other cells to prick into action, and so on.

That would indeed be a highly complicated ATM machine, but this is not unimaginable --at least, technologically.

Best, Prashant.


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Eklimur Raza


It appears some students in this website are confused about elasticity of demand and the slope of the demand curve when they are trying to figure out why rectangular hyperbola comes up in case of unitary demand curve. First, they don't know that RH can be depicted in a positive quadrant of price,quantity plane. Secondly, they make the mistake that the slope of RH is constant at -1. Two points could help them: first, e=1 at each and every point of the RH, because the tangent at any point shows lower segment=upper segment (another geometric definition of e); yet slopes at different points,dQ/dP, are different; second, e is not slope but [(Slope)(P/Q)]in absolute terms. Caveat: only if we measure (log P) along the horizontal axis and (log Q) up the vertical axis, can we then say slope equals elasticity --in which case RH on P,Q plane is transformed into a straight-line demand curve [with slope= -tan 45 deg] on (log Q),(logP) plane, and e= -d(log Q)/d(log P). [By the way, logs are not used in college textbooks --although that is helpful in econometric estimation of elasticity viewed as an exponent of P, when demand equation is transformed into log-linear form.] I have not found the geometrical explanation I have given in any textbook followed in undergraduate and college classes in Canada (including the book followed in a university where I taught for a short time and in the book followed in George Brown College, Toronto, where I teach.


About 11 years' teaching economics and business studies, and also English, history and elementary French.Practical experience in a development bank, working with international donor agencies like the World Bank and the ADB. Experience in free-lance journalism, including Canada's "National Post."

I teach micro- and macroeconomics at George Brown College (continuing education), Toronto, ON, Canada.

Many articles and editorials, on different subjects, in English newspapers. Recently an applied Major Research Paper, based on a synthesis of the Solow growth model and the Lewis two-sector model, has be accepted by Ryerson University, Toronto. Professors Thomas Barbiero and Eric Cam, Ryerson University, accepted the paper.

Master degree in Interantional Economics and Finance and diploma with honours in Business Administration from Canada.

Awards and Honors
Received First Prize in an inter-university Literary Contest.

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