Which of the following is an example of money functioning as a unit of account?
A) Bank of America charging 7 percent on an auto loan.
B) Pepsi charging $1 for a can of soda.
C) eBay using PayPal as a method of payment.
D) Your writing a check at Target to pay for new clothes.
B
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What impact would the Fed's raising the interest rate have on any inflationary pressure in the economy?
A) An increase in interest rates decreases the money demand, which could slow increases in the price level. B) An increase in interest rates decreases the exchange rate, which causes net exports to rise, generating inflation. C) An increase in interest rates increases real GDP, which creates inflation in an economy. D) An increase in interest rates increases the money supply, which could cause the price level to increase.
Comment on the following statement: "Elasticity is constant along a straight-line demand curve"
What will be an ideal response?
A rise in stock prices ________ the net worth of firms and so leads to ________ investment spending because of the reduction in moral hazard
A) raises; higher B) raises; lower C) reduces; higher D) reduces; lower
In the long run, an increase in the growth rate of the money supply causes the inflation rate to ________, which then causes the nominal interest rate to ________
A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease