Using the five criteria in the book, explain how U.S. currency is suitable to use as a medium of exchange
What will be an ideal response?
1. Dollars are acceptable to most traders, either in exchange for goods and services or as payment of debts.
2. Coin and currency in circulation are of standardized quality. Bills of the same denomination are identical in appearance.
3. Coins and currency in circulation are durable: their value is not altered by spoilage.
4. Dollars are light in weight so that they are very valuable relative to their weight and they are easily transported.
5. Finally, dollars are divisible.
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The statement, "My Hello Kitty Limited Edition Vespa scooter is worth $5,500" represents money's function as a
A) medium of exchange. B) store of value. C) standard of value. D) commodity.
Which of the following is not how economists describe the term "economic rent?:
A. The gains that workers and owners of capital receive from supplying their labor or machinery in factor markets. B. The producer surplus in output markets. C. The rental price of a factor of production minus the cost of supplying it. D. The total revenue that a factor of production earns its owner.
Assume the price of capital falls relative to the price of labor and, as a result, the demand for labor increases. Therefore:
A. capital is very highly substitutable for labor. B. the output effect is greater than the substitution effect. C. the income effect is greater than the output effect. D. the substitution effect is greater than the output effect.
If a person has an absolute advantage in some activity, she must have a comparative advantage in that activity as well.
Answer the following statement true (T) or false (F)