Which of the following defines the "store of value" 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. That the materials used to manufacture money are of medium grade or quality, so that people will not hoard money for its commodity value.
d. That money is widely accepted in exchange for goods and services.
b
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"Price elasticity measures how many more units of a good that consumers will buy given a decrease in price." Do you agree or disagree? Explain
What will be an ideal response?
When people mistake changes in nominal prices for changes in real prices, what has occurred?
A. Money confusion B. Price illusion C. Price confusion D. Money illusion
Which of the following causes the aggregate supply curve to shift to the left, ceteris paribus?
A. An increase in the cost of labor B. A decrease in the money supply C. An increase in government spending on goods D. A decrease in interest rates
Exhibit 16-1 Money market demand and supply curves
Beginning from an equilibrium at E1 in Exhibit 16-1, a decrease in the money supply from $150 billion to $100 billion causes people to:
A. sell bonds and drive the price of bonds down. B. sell bonds and drive the price of bonds up. C. buy bonds and drive the price of bonds down. D. buy bonds and drive the price of bonds up.