A . Explain why paper money doesn't have to be backed by gold or other valuable goods in order to be valuable. b. Is there a disadvantage to using fiat money? Explain
a . As long as people have confidence that paper money will serve the functions of money, then they will
be willing to accept it and so it will have value.
b. Yes. There is nothing to limit the supply of fiat money. If overprinting occurs, then the value of the fiat
money will diminish.
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Which of the following statements is TRUE?
A) The presence of positive economic profit in a perfectly competitive market is consistent with the characteristics of a long-run competitive equilibrium. B) When firms in a perfectly competitive market incur economic losses, some will exit in the long run, thereby shifting the industry supply curve rightward. C) If a profit-maximizing firm in a perfectly competitive market is making an economic profit, then it must be producing at a level of output where price is greater than average total cost. D) If a profit-maximizing firm in a perfectly competitive market is incurring an economic loss, then it must be producing at a level of output where price is greater than average total cost.
The price elasticity of demand coefficient for a good will be greater:
a. if close substitutes exist. b. if minor complements exist. c. in the short-run. d. if a small portion of the budget will be spent on it.
Although state and local taxes are highly progressive, federal taxation is predominantly regressive.
Answer the following statement true (T) or false (F)
A price ceiling that is set below the equilibrium price will cause:
A. total economic surplus to rise. B. producer surplus to fall. C. an increase in demand. D. quantity supplied to exceed quantity demanded.