your 55 bill in exchange for bread and miltk, the bill serves a r9) When a groce
ID: 1104255 • Letter: Y
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your 55 bill in exchange for bread and miltk, the bill serves a r9) When a grocery store A) standard of deferred payment C) store of value B) medium of exchange D) unit of account 20) By making exchange- money allows for8 easier, specializatiien costs D) harder specialization; costs money allows for A) easier, specialization; productivity C) harder: generalization: productivity 21) Fiat money A) functions well only if can be redeemed for gold or other precious metals B) is rarely used in modern economies C) serves well as a medium of exchange, but not as a store of value. D) has no or very little value except as money 22) 22) Tax i increases on business income decrease aggregate demand by decreasing B) business investment spending D) wage rates A) government spending. C) consumption spending. 23) 23) A good can serve as money only if A) govenment mandates that the good must be accepted in payment of debts. B) citizens accept the good as a means of payment for transactions and debts. C) it has intrinsic value or if it is backed by precious metals. D) it is declared by authorities to be legal tender. 24) If the govemment purchases multiplier equals 2, and real GDP is $13 trillion with potental real 24) GDP $14 trillion, then government purchases would need to increase byto restore the A) $7.25 trillion economy to potential real GDP. B) $1 trillion C) $250 billion D) $500 billion 25) The Fed can increase the federal funds rate by 25) A) selling Treasury bills, which decreases bank reserves. B) selling Treasury bills, which increases bank reserves. C) buying Treasury bills, which increases bank reserves. D) buying Treasury bills, which decreases bank reserves. 26) Which of the following is an objective of fiscal policy? A) high rates of economic growth B) discovering a cure for AIDs C) energy independence from Middle East oil D) health care coverage for all Americans E) homeland securityExplanation / Answer
When a grocery store accepts your $5 bill in exchange for bread and milk, the $5 bill serves as a medium of exchange.
By making exchange easier, money allows for specialization and higher productivity.
Fiat money has no or very little value except as money.
Tax increases on business income decrease aggregate demand by decreasing business investment spending.
A good can serve as money only if it is declared by the authorities to be legal tender.
If the government purchases multiplier equals 2, and real GDP is $13 trillion with potential real GDP $14 trillion, the government purchases would need to increase by $500 billion to restore the economy to potential real GDP.
The Fed can increase the federal funds rate by selling treasury bills, which decreases bank reserves.
The objective of fiscal policy is high rates of economic growth.
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