Describe the three purposes that money must perform.
What will be an ideal response?
Money must function as a medium of exchange or be accepted as payment for goods, services, and debts. Money should also be a store of value so that it can be used for future purchases. Money must be a standard of value or serve to measure the value of goods and services.
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Which of the following represents a function of money?
A) standard of deferred payment B) medium of exchange C) unit of accounting D) all of the above
If the nominal interest rate is 4 percent and the inflation rate is 1 percent, then the real rate of interest is
A) 1 percent. B) 3 percent. C) 4 percent. D) 5 percent.
Suppose the economy is in equilibrium when there is a change in environmental policy that bans all pesticides and herbicides on farmland. We would expect to observe
A) a decrease in aggregate supply and an increase in aggregate demand. B) a decrease in both real output and the natural rate of unemployment. C) a decrease in real output and an increase in the natural rate of unemployment. D) a decrease in real output and an increase in the price level.
As a percentage of GDP, federal expenditures ________ from 1992 to 2001, ________ from 2001 to 2011, and have ________ since 2011
A) rose; fell; risen B) fell; fell; risen C) rose; rose; fallen D) fell; rose; fallen