Which of the following best illustrates the medium of exchange function of money?
a. You keep some money hidden in your shoe.
b. You keep track of the value of your assets in terms of currency.
c. You pay for your oil change using currency.
d. None of the above is correct.
c
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Other things equal, the interest rate on a loan will be smaller:
A. The greater the risk involved B. The smaller the amount of the loan C. The longer the length of the loan D. If the loan interest is exempt from taxation
If the income-expenditure multiplier equals 2.5 and a 1 percent increase in the real interest rate reduces autonomous spending by 200 units, then a 1,000 unit expansionary gap can be eliminated by ________ the real interest rate by ________ percent.
A. increasing; 2.5 B. increasing; 2.0 C. decreasing; 2.0 D. increasing; 4.0
The following data relate to the supply schedule of a product.PriceQuantity Supplied$51001020015250203002535030500Using the regular percentage change formula, what is the price elasticity of supply when price decreases from $10 to $5?
A. perfectly elastic B. unit elastic C. elastic D. inelastic
Ignoring any supply-side effects, to close a recessionary gap of $100 billion with a government expenditure multiplier of 5, the government could
A) increase government expenditure on goods and services by $100 billion. B) raise taxes by $100 billion. C) increase government expenditure on goods and services by $20 billion. D) raise taxes by more than $20 billion. E) decrease government expenditure on goods and services by $20 billion.