Money is valuable because it
A) is backed by gold and silver.
B) is issued by credit card companies such as American Express, MasterCard, and Visa.
C) reduces transaction costs.
D) is backed by U.S. Treasury bonds.
C) reduces transaction costs.
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Suppose a firm operates in the short run at a price above its average total cost of production. In the long run the firm should expect
a. new firms to enter the market. b. the market price to rise. c. its profits to rise. d. Both b and c are correct.
Answer the following questions true (T) or false (F)
1. Lowering the individual income tax rate will increase household disposable income and consumption spending. 2. Contractionary fiscal policy involves decreasing government purchases or increasing taxes. 3. Expansionary fiscal policy is used to increase aggregate demand in an attempt to fight rising inflation.
Capital is a factor of production. An example of capital as a factor of production is
A) machines. B) education. C) stocks. D) money. E) bonds.
Which one of the following statements is true in the four-sector circular model?
a. Money flows from government to households for taxes. b. Money flows from foreign economies to households for exports. c. Money flows from government to firms for goods and services. d. Money flows from firms to foreign economies for exports. e. Money flows from households to foreign economies for resources.