Although gold is highly valued by most people, it is difficult to use as a medium of exchange. Explain
What will be an ideal response?
Gold is an example of commodity money. The problem with commodity money is that its value depends upon the quality of the commodity. The higher the quality, the higher the value. It violates one of the 5 criteria that make a commodity suitable to use as a medium of exchange. If someone wanted to cheat another in a trade involving gold, the person could mix impure metals with precious metals. The purity would have to be checked at each trade.
Gold is also heavy. For large transactions transport of the metal required might be difficult.
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What is the main argument which explains why an increased public deficit financed tax cut may not result in increased consumption?
A) People will increase savings to "finance" debt repayment by future generations. B) People will increase consumption to "finance" debt repayment by future generations. C) Savings is determined by uncertain events, the timing of future illnesses and death. D) Savings is determined by certain events, the timing of future illnesses and death.
A firm that backward vertically integrates
A) moves downstream in the production process. B) requires that the production process be relatively simple. C) has to merge with another firm. D) may be producing its own inputs.
The Lerner Index is derived from the profit-maximizing condition of a firm
Indicate whether the statement is true or false
Antitrust laws seek to prevent actions that harm society such as
A) price discrimination. B) refusal to deal. C) predatory pricing. D) All of the above.