What is the "unit of account" function of money?
A. a common measurement of the relative value of different goods and services
B. the ability of money to hold value over time
C. the quality of money not to be hoarded because of its commodity value
D. the function of money to be widely accepted I exchange for goods and services
Answer: A
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The Fed responds to money demand shocks by
a. changing the velocity of money b. changing the money supply c. following the money creation rules responsible for its success in the past two decades d. increasing the required reserve ratio e. changing its definition of the natural rate of unemployment
The self-correcting property of the economy means that output gaps are eventually eliminated by:
A. increasing or decreasing potential output. B. government policy. C. decreasing inflation only. D. increasing or decreasing inflation.
Which of the following best defines the exchange rate?
A. The rate at which one currency can be exchanged for another B. The rate at which the goods of one country can be exchanged for the goods of another C. The ratio of the number of units of one currency in circulation to the number of units of another currency in circulation D. The difference between the inflation rate in one country and the inflation rate in another country
In the aggregate expenditures model of the economy, a downward shift in aggregate expenditures can be caused by a decrease in
A. saving or an increase in government spending. B. taxes or an increase in government spending. C. interest rates or a decrease in taxes. D. government spending or an increase in taxes.