Which of the following provides the best explanation of why money is valuable?
a. Money is valuable because it is declared legal tender by the government issuing it.
b. Money is valuable because it is scarce relative to the demand for the services it provides.
c. Money is valuable because it is backed by precious metals, primarily gold and silver.
d. Money is valuable because it has intrinsic value, independent of its use as a means of exchange.
B
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The fact that international specialization and trade based on comparative advantage can increase world output is demonstrated by the reality that
A. a nation can consume more than it can produce only by going into debt. B. only one of two nations engaged in trade can consume more than it produces. C. both of two nations can consume more than they produce if they engage in trade. D. the production possibilities frontiers of any two nations are identical.
The relationship between MPC and MPS is:
a. 1 + MPC = MPS. b. 1 ? MPC = MPS. c. 1 + MPS = MPC. d. MPC ? MPS = 1.
What are variables that reflect peaks and troughs in economic activity as they occur?
a. Coincident economic indicators b. Lagging economic indicators c. Leading economic indicators d. Productivity indicators
Which of the following statements is true?
A) The motivation to try to explain something is at the heart of building a theory. B) If a theory makes people uncomfortable then it should be discarded or ignored. C) In order for a theory to be valid it must be a perfect description of reality. D) Building a theory and evaluating a theory are the same thing.