What are the five characteristics that make an asset suitable to be used as a medium of exchange?
What will be an ideal response?
It must be acceptable to most people; standardized in terms of quality; durable so that it doesn't become too worn out to be usable; valuable relative to its weight; divisible since prices of goods and services vary.
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Suppose that in some tax year you earned a nominal interest rate of 6 percent. During the time you held these funds inflation was 1 percent. You compute that you made a real after-tax interest rate of 3 percent. What was your tax rate?
a. 40 percent. b. 33.3 percent. c. 25 percent. d. 50 percent.
You are hired by the Bureau of Economic Analogies (BEA) as an economic consultant. The Chairperson of the BEA tells you that he believes the current unemployment rate is too low. The unemployment rate can be increased if aggregate output decreases. He wants to know what policy to pursue to decrease aggregate output by $100 billion. The best estimate he has for the MPC is 0.9. Which of the following policies should you recommend?
A. Cut taxes by $60 billion and to increase government spending by $60 billion. B. Decrease government spending by $100 billion. C. Decrease government spending by $10 billion. D. Increase taxes by $100 billion.
If your income increases from $30,000 to $40,000 and your savings increases from $2,000 to $4,000 . your marginal propensity to save (MPS) is:
a. 0.2. b. 0.4. c. 0.5. d. 0.8. e. 1.0.
How much is the unemployment rate at point Q?
