Inmates at the federal penitentiary at Lompoc, California, accepted packages of mackerel in exchange for goods and services. What function do these packages of mackerel perform?
A) They function as a store of value.
B) They function as a medium of exchange.
C) They function as a unit of account.
D) They function as a factor of production.
Ans: B) They function as a medium of exchange.
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When the Fed engages in an open market purchase, the money supply ________ and the nominal interest rate ________.
A. increases; increases B. decreases; increases D decreases; decreases C. increases; decreases
If a producer is not able to expand its plant capacity immediately, it is
A) operating in the long run. B) operating in the short run. C) losing money. D) bankrupt.
The combining of two or more businesses into one is known as
a. a merger b. an acquisition c. a partnership d. a cooperation e. a joint venture
Suppose that if poor households have a price elasticity of demand for medical care of 0.50 and rich households have a price elasticity of demand for medical care of 0.25, then a price increase of 10% would lead to the poor households reducing their quantity demanded for medical care by:
A. 2.5%. B. 5%. C. 25%. D. 50%.