Matthew purchases a candy bar with his allowance. This purchase represents using money as
A) a medium of exchange.
B) a store of value.
C) an unit of account.
D) none of the above.
A
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Why was the Fed reluctant to rescue insolvent banks?
A) It thought it may lead to moral hazard. B) It thought it may lead to adverse selection. C) It thought they were still liquid. D) It did not think they were insolvent.
If you take $500 out of a savings deposit and put it into a checking account, the immediate effect (do not consider the money multiplier):
a. M1 rises, M2 remains the same, and the monetary base remains the same. b. M1 falls, M2 falls, and the monetary base remains the same. c. M1 rises, M2 rises, and the monetary base remains the same. d. M1, M2, and the monetary base fall. e. M1, M2, and the monetary base remain the same.
Normative statements are not
a. descriptive. b. prescriptive. c. claims about how the world should be. d. made by economists speaking as policy advisers.
Equilibrium gross domestic product (GDP) in the short run is determined at the point where
A. gross domestic production equals aggregate demand. B. the rate of unemployment equals zero. C. domestic production equals domestic consumption. D. imports equal exports.