What or who backs the value of fiat money?
a. The power of the state
b. Gold and silver owned by the large commercial banks
c. Foreign exchange held by the central bank
d. Gold and silver owned by general public.
a
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Market economies are not constrained by scarcity; only planned economies have that problem.
Answer the following statement true (T) or false (F)
According to the interest-rate-based transmission mechanism for monetary policy, a decrease in the money supply will cause the
A) interest rate to fall, causing planned real investment spending to rise and leading to an increase in aggregate demand. B) interest rate to fall, causing planned real investment spending to rise and leading to a decrease in aggregate demand. C) interest rate to rise, causing planned real investment spending to fall and leading to a decrease in aggregate demand. D) interest rate to rise, causing planned real investment spending to rise and leading to a decrease in aggregate demand.
Why does the presence of negative externalities in the production of a good lead to an overproduction of the good?
What will be an ideal response?
Financial innovations such as direct deposit of paychecks, electronic payment of bills, and automated teller machines (ATMs) have likely ________
A) had minimal effect on M1 and M2 B) reduced the size of M2 relative to M1 C) increased both M1 and M2 relative to GDP D) caused the growth rates of M1 and M2 to become more stable E) reduced the size of M1 relative to M2