Which of the following correctly describes the difference between commodity money and fiat money?
a. Fiat money is only used in Italy, and is issued by a major Italian automobile manufacturer to support Italian schools.
b. Commodity money is either made out of a valuable commodity like silver or gold, or is redeemable for a valuable commodity. Fiat money is not.
c. Commodity money can only be
used to buy commodities such as grains or lumber, while fiat money can be used to buy anything.
d. Fiat money is used during times of emergency, such as hurricanes or war, when the existing stock of commodity money is inadequate to purchase needed goods and services.
b
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A person buys a newly issued bond that matures in 10 years with a face value of $10,000 and a coupon rate of 5.2%. How much money will the bondholder receive in the tenth year?
A. $10,052. B. $10,520. C. $10,000. D. $52. E. $9,480.
The Ricardian equivalence theorem states that
A. the effects of an increase in government spending are equivalent to the effects of an increase in the money supply. B. an increase in government spending financed by higher taxes has no effect on aggregate demand. C. government spending financed by taxes is equivalent to government spending financed by borrowing. D. spending on national defense is a direct expenditure offset.
If the MPS is 0.60, MPC
A. is 1.60. B. is 0.40. C. is 0.30. D. cannot be determined by the given information.
Free trade is better than protection for a small country
Indicate whether the statement is true or false