Money solves the problem of double coincidence of wants that would regularly occur under a system of credit
Indicate whether the statement is true or false
FALSE
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Suppose the government runs a budget surplus in a given year. It can reduce its overall federal debt by
A) not buying anything on credit. B) forcing a change in net exports. C) increasing taxes on luxury items. D) buying back bonds it sold to the public.
When the Fed buys $100 million of securities from a commercial bank the
A) required reserve ratio decreases. B) monetary base increases. C) bank's reserves decrease. D) bank is risking its depositors' money. E) money supply decreases.
Suppose you find $1000 in your attic and decide to deposit it all into your local bank, which must hold 10% as required reserves. The deposit expansion multiplier suggests that this $1,000 "injection" of new money will, in reality, most likely
A) increase the money supply by more than $1,000. B) increase the money supply by less than $1,000. C) increase the money supply by exactly $1,000. D) increase the money supply by exactly $10,000.
Smith and Jones comprise a two-person economy. Their hourly rates of production are shown in the accompanying table. Calculators Per HourComputers Per HourSmith10010Jones1206 The opportunity cost of making a calculator for Smith is ________ and for Jones it is ________.
A. 1 computer; 0.5 computers B. 0.10 computers; 0.05 computers C. 10 computers; 20 computers D. 0.6 computers; 1.2 computers