In the 1800s, people in mining towns in the West often paid for goods with gold nuggets or gold dust. What was the function of gold?
(A) It was used as representative money.
(B) It was used as fiat money.
(C) It was used as part of a barter system.
(D) It was used as a currency.
Ans: (D) It was used as a currency.
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The union would have a better bargaining position in the negotiations if
a. The firm can hire individual workers at a lower wage b. The union has low wage workers who cannot afford to be off work c. The union has a strike fund to pay workers during work stoppage actions d. The firm can easily replace workers with machinery
Assume a simple macroeconomic model. When inventories rise unexpectedly,
a. income is above its equilibrium value. b. income will rise until it reaches its equilibrium value. c. total spending is higher than total output. d. All of the above.
Walter puts money in a savings account at his bank earning 3.5 percent. One year later he takes his money out and notes that while his money was earning interest, prices rose 1.5 percent. Walter earned a nominal interest rate of
a. 3.5 percent and a real interest rate of 5 percent. b. 3.5 percent and a real interest rate of 2 percent. c. 5 percent and a real interest rate of 3.5 percent d. 5 percent and a real interest rate of 2 percent
Fiscal policy occurs when:
A. the government changes its plan for spending and taxing. B. the Federal Reserve makes changes to the federal budget. C. the government changes its plan for the money supply. D. the government raises or lowers nominal interest rates.