Savings accounts, certificates of deposit, and bonds pay interest and stocks pay dividends. Why does anyone hold on to currency or other forms of money and lose this extra income?
What will be an ideal response?
Money is more liquid than these other assets and this liquidity is often valuable. If one wants to purchase something, stocks cannot be used. The stock must be sold and payment to the broker must be paid. The transaction costs will be greater than the costs of holding the money balances.
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If supply increases, the equilibrium price will rise and the equilibrium quantity will fall.
Answer the following statement true (T) or false (F)
When people are considered risk averse, they:
A. generally have a low willingness to take on risk. B. generally have a high willingness to take on risk. C. will only participate in low-risk activities. D. will never accept risk in any situation.
_________ inflation can be explained by an ________ shift in the aggregate _________ curve
a. Demand-pull, leftward, demand b. Cost-push, rightward, supply c. Demand-pull, leftward, supply d. Cost-push, rightward, supply
Which of the following is considered by economists to be the most fundamentally scarce?
a. money b. ideas c. needs d. food e. physical resources