The use of money as a medium of exchange
I. lowers transaction costs.
II. permits more specialization.
A) I only B) II only C) Neither I nor II D) Both I and II
D
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Capital gains are a type of income earned from
A) interest on savings accounts. B) employment in a factory. C) the sale of assets. D) all of the above.
The budget line represents a consumer’s preferences for a commodity.
Answer the following statement true (T) or false (F)
The AS/AD model looks similar to the microeconomic supply and demand model
A. but is not based on it. B. and is based on the microeconomic supply and demand model because the AS/AD is a macro representation of the micro model. C. and is based on the microeconomic supply and demand model because both are based on opportunity costs. D. and is based on the microeconomic supply and demand model because both are based on the principle of substitution.
If the intended aim of the price floor set in the graph shown was a net increase in the well-being of producers, then normative analysis would conclude that:
A. the policy was ineffective, since surplus gained by producers through higher prices is greater than the surplus they lost through deadweight loss. B. there is no "right" conclusion to be reached in a normative sense, since people have different opinions concerning what constitutes a better outcome. C. the policy was effective, since surplus gained by producers through higher prices is greater than the surplus lost by consumers through higher prices. D. the policy was effective, since surplus gained by producers through higher prices is greater than the surplus they lost through deadweight loss.