When money is used to purchase goods and services, it serves as a:
A. medium of exchange.
B. store of value.
C. unit of account.
D. double coincidence of wants.
Answer: A
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According to Keynes, the consumption-income relationship is shown as C = a + bYD. Therefore, the saving-income relationship is
a. S = a + (1 ? b)YD. b. S = ? a + (1 ? b)YD. c. S = a + (1 ? b)/YD. d. S = ? a + (1? b)/YD.
In the above figure, along which range would total revenue rise by raising prices?
A) between point a and point b B) between point c and point d C) between point d and point e D) above point a
A shareholder in a corporation
A) may not sell his or her share of ownership in the business without the business dissolving. B) can earn interest, but not dividends, from the profits of the business. C) is a part owner of the business. D) is personally liable for the debts of the corporation.
One problem with real business cycle theory is that
A) it is more successful in explaining expansions than in explaining contractions. B) it relies almost entirely on Keynes' original ideas, ignoring much of the progress made since then. C) it treats government officials as well-meaning public servants, despite much evidence to the contrary. D) it defines "productivity" in a new and not very intuitive way. E) its models downplay the importance of technological progress in the economy.