The main disadvantage of using money as a store of value is that
A. unlike other assets, money serves as a medium of exchange.
B. barter is a more efficient way to conduct transactions than using money.
C. other assets pay relatively higher rates of interest than money.
D. other assets provide greater anonymity than cash.
Answer: C
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Except for perfect substitutes or perfect complements, indifference curves
A) are straight lines with a positive slope. B) slope upward to the right. C) are bowed in toward the origin. D) are bowed out away from the origin.
Bananas in the European Union often retail for twice more than they do in the U.S. What is the most likely explanation for this fact?
A) A complicated system of tariffs and quotas that the EU has imposed to control the imports of bananas. B) More significant freight costs to ship bananas from Central America. C) Larger markup by European retailers. D) None of the above.
When the Fed conducts expansionary monetary policy, lower short-term interest rates will tend to stimulate the economy. How will the change in the velocity of money affect this result?
a. Velocity will decline, enhancing the stimulus effect. b. Velocity will increase, somewhat dampening the stimulus effect. c. Velocity will increase, enhancing the stimulus effect. d. Velocity will decline, somewhat dampening the stimulus effect.
Long-run equilibrium for a perfectly competitive industry occurs when:
A. P = MC = ATC. B. P = MC = AVC. C. P = MC = AFC. D. P > MC = ATC.