If fiat money has no value apart from its use as money, how can it be used as a medium of exchange?
What will be an ideal response?
The most important reason paper currency circulates as a medium of exchange is the confidence of consumers and firms that if they accept paper currency they will be able to pass it along when they need to buy goods and services. Also, the federal government has designated it to be legal tender, meaning the government accepts it in payment of taxes and requires it to be accepted in payment of debts.
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A decrease in the level of real GDP in the economy leads to
A) a leftward shift in the demand for money curve. B) a rightward shift in the demand for money curve. C) a leftward movement along the demand for money curve. D) a rightward movement along the demand for money curve.
A natural monopoly that is regulated to set price equal to marginal cost
A) makes an economic profit. B) makes zero economic profit. C) incurs an economic loss. D) could make an economic loss, an economic profit, or zero economic profit. E) makes zero normal profit.
When full employment is present in the United States, which of the following is true?
What will be an ideal response?
If a scalper for the Super Bowl is able to charge $5,000 for a front-row seat, this suggests that
A. at the regular price, the quantity of Super Bowl tickets demanded equals the quantity supplied. B. at the regular price, there is a shortage of Super Bowl tickets. C. the scalper is making the football fan worse off. D. at the regular price, there is a surplus of Super Bowl tickets.