Briefly explain the three functions of money
Money serves as a medium of exchange, which means it is generally accepted in exchange for goods and services. The existence of a medium of exchange reduces transaction costs. Money serves as a measure of value, allowing people to compare value and cost in a common unit, thus facilitating trade. Money is also used to store value, which means money is an asset. Although most forms of money do not pay interest like other assets, money is highly liquid, meaning it can easily be transformed into other goods.
You might also like to view...
Last year in the country of Union, the price level increased and real GDP increased. Such an outcome might have occurred because short-run aggregate supply ________ and aggregate demand ________
A) decreased; decreased B) increased; did not change C) increased; decreased D) did not change; increased
Using the above table, moving from alternative C to alternative B, what is the opportunity cost of one loaf of bread?
A) 1 pizza pie B) 30 pizza pies C) 2 pizza pies D) 0.5 pizza pie
You have received your advanced degree in biochemistry with a specialty in recombinant DNA technology. Your colleagues wish to form a partnership to research adenovirus vectors
Your legal counsel advises you on the following aspects of a partnership, yet you tell her, based on your knowledge of economics, that you think one of the following points is INCORRECT. A) An advantage of the partnership would be that it is relatively easy to form, almost as easy as forming a proprietorship. B) The income of the partnership is treated as personal income and is subject only to personal taxation rates. C) The personal assets of each partner should be safe and would not necessarily be at risk due to claims by financial institutions. D) Partnerships often help reduce the costs of monitoring job performance in situations in which it is difficult to measure objectively.
Suppose you were given a gift of a gold mine that generates $1,000 of net income every year, indefinitely. And suppose the equilibrium rate of interest is 5 percent. What is the present value of that gold mine?
a. $20,000 b. $5,000 c. $50,000 d. $500,000 e. $10,000