Explain the "shoe-leather" costs of inflation
What will be an ideal response?
When prices rise rapidly during anticipated inflation, people with money spend time finding goods to purchase to get rid of money. Households and firms also spend time finding others to barter goods for goods and spend time watching foreign exchange rates to be able to trade falling value domestic currency for constant value foreign currencies. These activities are costly, in part because they force people to spend time dealing with the rapidly falling value of money. The costs that people incur from running around to get rid of money are the shoe-leather costs.
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What is one of the biggest benefits of trade that is hard to measure?
a. the transfer of goods from rich countries to poor countries b. the transfer of knowledge from poor countries to rich countries c. the transfer of knowledge from rich countries to poor countries d. the transfer of goods from poor countries to rich countries
When disposable income increases from $7 trillion to $7.5 trillion, consumption expenditure increases from $6.5 trillion to $6.9 trillion. The MPS equals
a) 0.75 b) 0.76 c) 0.8 d) 0.2
Which of the following statements best describes the 12 Federal Reserve Banks?
A. They are privately owned and privately controlled central banks whose basic goal is to provide an ample and orderly market for U.S. Treasury securities. B. They are privately owned and publicly controlled central banks whose basic goal is to control the money supply and interest rates in promoting the general economic welfare. C. They are privately owned and publicly controlled central banks whose basic goal is to earn profits for their owners. D. They are privately owned and publicly controlled central banks whose basic function is to minimize the risks in commercial banking in order to make it a reasonably profitable industry.
Oligopoly is more difficult to analyze than other market models because:
A. the number of firms is so large that market behavior cannot be accurately predicted. B. the marginal cost and marginal revenue curves of an oligopolist play no part in the determination of equilibrium price and quantity. C. of mutual interdependence and the fact that oligopoly outcomes are less certain than in other market models. D. unlike the firms of other market models, it cannot be assumed that oligopolists are profit maximizers.