What are the three properties of money?
What will be an ideal response?
Money serves as a medium of exchange that avoids the problem of double coincidence of wants; it is a unit of account that makes it easier to conduct economic transactions; and it is a store of value that is preserved between transactions.
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Suppose that firms in the chemical industry are allowed, free of charge, to dump harmful products into rivers. If this is the case in a competitive market, how will the price and output of the chemical products compare with their values under conditions of ideal economic efficiency?
a. Price is too low; output is too large. b. Price is too high; output is too large. c. Price is too low; output is too small. d. Price is too high; output is too small.
Consider an industry with two firms producing similar products. Each firm's total cost (in dollars) is given below.Mega Corp: TC = 5,000 + 100QBig Inc: TC = 4,000 + 200QIf each firm is producing 15 units, you would expect:
A. both Mega Corp and Big Inc to reduce output and charge higher prices. B. Big Inc to charge a lower price than Mega Corp. C. Mega Corp to charge a lower price than Big Inc. D. both firms to continue to produce 15 units.
An increase in nominal GDP (with inflexible prices) results in:
a. an increase in the nominal rate of interest. b. an increase in the U.S. dollar exchange rate. c. a decrease in the nominal rate of interest. d. increased price and wage flexibility.
Overshooting is when exchange rates:
a. adjust more in the short run than they need to for long-run equilibrium. b. adjust less in the short run than they need to for long-run equilibrium. c. are unable to adjust because of fixed exchange rates. d. adjust at the same rate as prices.