What advantages does a money economy have over a barter economy?
The existence of money substantially reduces the costs of transactions. To trade in a barter economy, you must find someone who not only wants to buy the goods that you have but who also wants to sell the goods you want to buy. This type of trading quickly becomes time consuming and costly. When money serves as a medium of exchange, specialization, division of labor, and trade are all made much easier.
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Refer to Figure 19-11. The graph above depicts supply and demand for British pounds during a trading day, where the quantity is millions of pounds. In order to support a fixed exchange rate of $2.00 per pound, the British central bank must
A) buy 0.6 million pounds per trading day. B) sell 1.2 million pounds per trading day. C) buy 1.2 million pounds per trading day. D) sell 0.6 million pounds per trading day.
Improving the education level of the labor force will
A. shift the production possibilities curve inward. B. not shift the production possibilities curve since the total size of the labor force has not been changed. C. shift the production possibilities curve outward. D. cause a movement from a point inside the production possibilities curve to a point on the curve.
Which of the following statements is consistent with the views of Joseph Schumpeter?
A) Research and development by competitive firms is responsible for most technological changes. B) An economy benefits from firms having market power because these firms are more likely to be able to commit funds for research and development. C) Enforcement of antitrust laws is necessary to promote competition among firms. D) A lack of competition discourages firms from developing new technologies.
The ABC Computer Company spends a lot of money for advertising designed to convince you that their personal computers are superior to all other personal computers. If the ABC Company is successful, the demand for ABC personal computers
A. and the demand for other firms? personal computers will become less price elastic. B. will become less price elastic, but the demand for other firms? personal computers will become more price elastic. C. will become more price elastic, but the demand for other firms? personal computers will become less price elastic. D. and the demand for other firms? personal computers will become more price elastic.