What is the "medium of exchange" function of money?
A. a common measurement of the relative value of different goods and services
B. the ability of money to hold value over time
C. the quality of money not to be hoarded because of its commodity value
D. the function of money to be widely accepted I exchange for goods and services
Answer: D
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Contractionary monetary policy should be used if:
A) aggregate demand-aggregate supply equilibrium is below potential output. B) aggregate demand-aggregate supply equilibrium is above potential output. C) aggregate demand-aggregate supply equilibrium is equal to potential output. D) none of the above.
Assume that the economy is initially at its equilibrium level of GDP. What will happen to the equilibrium level of GDP if planned investment decreases by 20, government spending increases by 30, and taxes increase by 10?
A) GDP will decrease by 60 B) GDP will decrease by 10 C) there will be no change in GDP D) GDP will increase by 10
If more buyers came into the market for a good, we would expect to see the market demand curve
A) shift inward and to the left. B) remain unchanged since none of the determinants of individual demand changed. C) shift outward and to the right. D) reflect a positive relationship between price and quantity demanded.
Explain how an economy which is presently above its balanced growth path will converge back to its balanced growth path?
What will be an ideal response?