Which of the following correctly describes the difference between commodity money and fiat money?
A. Fiat money has value based on the material from which it is made, while commodity money is accepted by law and not because of its tangible value.
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.
Answer: B
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According to the laws of demand and supply, if the price of beef increases, which of the following likely will occur?
A. The quantity demanded will decrease. B. The quantity demanded will remain constant. C. The quantity demanded will increase. D. The equilibrium price will increase but there will be no change in the market price. E. The quantity supplied will decrease.
The money that households might hold either as money or in interest-bearing assets, depending on the interest rate, is called the:
a. precautionary demand. b. transactions demand. c. speculative demand. d. liquidity motive. e. investment motive.
Interest is the payment for the use of: a. borrowed funds
b. natural resources. c. labor. d. any factor of production.
In Figure 2.1, Box 6 would be labeled
A. Q/t for quantity per unit of time. B. S for supply. C. P for price. D. P* for equilibrium price.