What is Money?
1. Money is a Medium of Exchange - instead of bartering goods and services for other goods and services, we just use money.
2. Money is a Unit of Account - money provides a common measurement to allow us to compare the relative value of different goods and services.
3. Money is a Store of Value - We can save money and use it later, knowing that will still have the ability to command goods and services in the future.
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Refer to Figure 13-3. Suppose the economy is at point A. If investment spending increases in the economy, where will the eventual long-run equilibrium be?
A) A B) B C) C D) D
If people have identical tastes, then the economic rent created by a common property is
a. zero. b. as large as possible. c. positive, but not as large as possible. d. negative.
What is the difference between labor-saving technology and labor-complementary technology?
What will be an ideal response?
Suppose in 2001, nominal GDP in Russia was 1000 rubles. If 2000 is the base year and the GDP deflator for 2001 was 0.50 (highly unlikely as is the GDP of 1000 rubles!), Russia's real GDP in 2001 was
a. –1,000 rubles b. 10,000 rubles c. 500 rubles d. 1000 rubles e. 2000 rubles