A new financial innovation results in people switching their funds from checking deposits to savings accounts. The quantity of M1 ________ and the quantity of M2 ________
A) decreases; decreases
B) increases; decreases
C) decreases; does not change
D) decreases; increases
C
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Which of the following is the most important advantage of using money rather than relying exclusively on barter?
A) The use of money encourages people to diversify and learn to do more things for themselves. B) The use of money encourages people who want to exchange to become more closely acquainted. C) The use of money lowers the cost of locating people with whom to exchange. D) The use of money reduces opportunities for fraud and theft. E) The use of money reduces selfishness because money in itself has no value.
Why are people more inclined to pick up a dime off the pavement in a parking lot, but not so inclined to dig three feet into the earth for a previously-buried dime?
A) The entrepreneurial spirit of Americans is gone. B) They don't know the value of the dollar—or dime—anymore. C) They weigh the expected additional costs and benefits, and choose accordingly. D) People haven't taken enough economics in college.
Which economic concept is the closest to the saying "There's no free lunch"?
a. Specialization b. Unlimited wants c. Underutilization of resources d. Opportunity costs e. Overutilization of resources
The fact that a higher standard of living tomorrow can only be achieved by sacrificing consumption today is an illustration of the:
A. principle of comparative advantage B. principle of increasing opportunity costs C. scarcity principle D. equilibrium principle Difficulty: Easy