Explain why it is not necessary for paper money to be backed by some commodity (e.g. gold) before it can have value
The U.S. money supply is no longer backed by gold, but that does not mean that it does not have value. It is the general acceptability of paper money that gives it value. As long as sellers continue to accept paper money as payment in exchange for goods and services that are valuable, the paper money will continue to have value.
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Suppose a country has a real interest rate of 4 percent and an inflation rate of 3 percent. If the income tax rate is 20 percent, then the after-tax real interest rate is
A) 2.6 percent. B) 7.0 percent. C) 5.6 percent. D) 4.0 percent. E) 1.4 percent.
Which area in the above figure is the deadweight loss if 100 snowboards are produced?
A) A + B + C B) D + E + F C) C + E D) There is no deadweight loss when 100 snowboards are produced.
Because Don has health insurance, he is more likely to see the doctor when he has a cold. This is an example of
A) adverse selection. B) moral hazard. C) both moral hazard and adverse selection. D) private information.
A monopoly that can perfectly price discriminate creates no deadweight loss
Indicate whether the statement is true or false