What makes something money? What functions does money perform? Why do you think packs of chewing gum don't serve as money?
What will be an ideal response?
Money is anything that is generally acceptable as a means of payment. Money has three functions: medium of exchange (money is accepted in exchange for goods and services), unit of account (prices are quoted in terms of money), and store of value (money can be held and exchanged for goods and services later). Packs of chewing gum do not function as money because they are not particularly good as a store of value—gum deteriorates. Additionally, packs of gum are not generally accepted in exchange for goods and services, so packs of gum are not a medium of exchange.
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Movements up along a particular short run Phillips curve are not consistent with: a. Increases in aggregate demand
b. Movements up along the short run aggregate supply curve. c. Shifting inflationary expectations. d. Movements up along a particular short run Phillips curve are consistent with all of the above.
The sole proprietor faces a disadvantage of limited liability
Indicate whether the statement is true or false
In the circular-flow diagram, firms own the factors of production and use them to produce goods and services
a. True b. False Indicate whether the statement is true or false
The figure below illustrates the market for British pounds. D£ and S£ are the nonofficial demand and supply curves of the British pounds, respectively.
If the exchange rate is pegged at $2.50 per pound
A. the pound will be overvalued. B. the British goods will become cheap in U.S. markets. C. the pound will be undervalued. D. the demand for American goods will fall in British markets.