Compared to a barter economy, using money increases efficiency by reducing:
a. transaction costs.
b. the need to exchange goods.
c. the need to specialize.
d. inflation.
a
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Briefly describe the following types of financial intermediaries:
1. Commercial bank 2. Investment bank 3. Mutual fund 4. Hedge fund 5. Pension fund 6. Insurance company
The purchasing power parity hypothesis implies that an increase in inflation in one country relative to another will over a long period of time
a. increase exports b. reduce the competitive pressure on prices c. lower the value of the currency in the country with the higher inflation rate d. increase foreign aid e. increase the speculative demand for the currency
When the government bans a good:
A. it is attempting to solve the nonexcludability problem. B. it makes acquiring that good illegal. C. the cost of breaking the ban changes the trade-offs consumers face. D. All of these statements are true.
In the short-run macro model, if firms produce more output than they sell, those firms will
a. increase the prices of their products b. decrease their output c. increase their output d. cut back on their consumption spending e. increase the prices of their products and reduce the amount of output they produce