Money is the most liquid asset, because as _______ it requires no conversion.
a) a unit of account
b) a medium of exchange
c) a store of value
d) fiat money
Ans: b) a medium of exchange
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Explain how positive externalities cause a wedge between private marginal costs and social marginal costs. Give an example of a positive externality and explain why it is, in fact, a positive externality. Draw a supply/demand diagram and add a social marginal cost curve that represents the presence of the positive externality. Explain the relationship between the equilibrium quantity and that which is socially efficient.
What will be an ideal response?
Suppose the exchange rate between the U.S. dollar and the Mexican peso was $1 = 5 pesos. A can of Pepsi sells for $2 in Boston and for 12 pesos in Mexico City
A) Purchasing power parity prevails with these prices. B) Purchasing power parity does not prevail with these prices. C) The U.S. dollar would be expected to depreciate. D) None of the above answers is correct.
Families receive income from two primary sources:
a. resource earnings and transfers b. transfers and subsidies c. wages and rents d. transfers and gifts e. interest and dividends
Reduced barriers to trade help explain an increase in U.S. exports and imports relative to GDP since 1950
a. True b. False Indicate whether the statement is true or false