In what sense can it be said that money is a social invention? How does a barter system of trade compare to the invention of money?
What will be an ideal response?
Money is a social invention in the sense that all members of a society must agree to accept a particular item in exchange for all other goods and services. Money permits a much greater degree of specialization in the economy and, therefore, a much higher standard of living. Without money, trade and exchange would have to take place in a barter system. This system requires the trading of goods or services for other goods or services. And furthermore, there must be a double coincidence of wants. This means that persons desiring a particular good or service must find someone with an opposite desire. This would require a great amount of search time that would reduce time available for production and, thus, reduce the amount of goods and services produced.
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If the liberum veto is used in a policy-making setting, it means:
A. complete consensus is needed for legislation to pass. B. it is easy to halt policies, because only one person needs to be bribed to stop them. C. that government is an easy target for an area to become corrupt or taken advantage of. D. All of these are true.
The GDP gap is the difference between:
a. frictional unemployment and actual real GDP. b. unemployment rate and real GDP deflator. c. actual real GDP and full-employment real GDP . d. full-employment real GDP and real GDP deflator.
When banks borrow from each other the interest rate charged is known as the
a. discount rate. b. prime rate. c. federal funds rate. d. over-the-counter rate.
If your bank receives a checkable deposit that results in $20,000 in excess reserves, and the banking system makes loans totaling $60,000, the maximum possible, then the money multiplier must be:
A. 2. B. 3. C. 3.5. D. 4.