Explain how cigarettes could be called "money" in prisoner-of-war camps of World War II
What will be an ideal response?
The cigarettes performed the three functions of money. They served as the medium of exchange because individuals did exchange items for cigarettes. They served as a unit of account because prices were quoted in terms of the number of cigarettes required for the exchange. They served as a store of value because an individual would be willing to save their cigarettes even if they did not smoke because they believed that they could exchange the cigarettes for something that they did want at some time in the future.
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After the September 11th attack on the World Trade Center, and with the emergence of the anthrax scare, the price and the purchases of gas masks jumped dramatically in New York City. In the economic way of thinking, which of the following occurred?
A) The supply curve for gas masks shifted to the right. B) The supply curve for gas masks shifted to the left. C) The demand curve for gas masks shifted to the right. D) The demand curve for gas masks shifted to the left. E) The demand curve for gas masks became upward-sloping.
A firm that is earning zero economic profit should go out of business.
Answer the following statement true (T) or false (F)
The fall in the money multiplier and money supply during the Great Depression
a. suggests that the public but not banks can be a major participant in the money supply process. b. implies that banks but not the public can be a major participant in the money supply process. c. means that neither the banks nor the public were involved in the money supply process. d. illustrates that both the public and banks can be major players in the money supply process.
Robert must always have sugar in his coffee. For Robert, the cross price elasticity of demand for coffee and sugar is
A) equal to 0. B) negative. C) positive. D) impossible to determine without more information.