Fiat money is
a. money with intrinsic value like gold coins.
b. anything that serves as a means of payment by government declaration.
c. any currency made of paper.
d. a tangible asset like a house.
e. money that is backed by gold.
B
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Your bike is worth $100 and if you park it outside at school there is a 25% chance that it will be stolen. Your utility function for money is U = 100(M). Assume throughout that the bike value and money are interchangeable since you could sell the bike instantly at its value if necessary. Are you risk averse, a risk lover, or risk neutral?
What will be an ideal response?
A fiscal policy action to close an expansionary gap is to:
A. decrease taxes. B. increase the marginal propensity to consume. C. increase transfer payments. D. decrease government purchases.
An individual's consumer surplus is the difference between the maximum price that she or he is willing to pay and the actual price.
Answer the following statement true (T) or false (F)
In the simple Keynesian model, equilibrium aggregate output is determined by
A) aggregate demand. B) aggregate supply. C) the national demand for labor. D) the price level.