Which of the following must be true of a commodity for it to be used as money?
a) It must be backed by gold.
b) It must be made of paper or metal.
c) It cannot have intrinsic value.
d) It must be readily accepted by many people.
Ans: d) It must be readily accepted by many people.
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Measuring the rate of inflation using a market basket that excludes food and energy prices is preferred by some analysts because this measure, called core inflation,:
A. provides a real, rather than a nominal, rate of inflation. B. gives a better measure of ongoing, sustained price changes. C. is more consistent with measures of inflation used in other countries. D. fluctuates more than measures of inflation that include food and energy prices.
Suppose a glass of orange juice has a price of $2 and a glass of soft drink has a price of $1 . If the consumer is maximizing utility,
a. juice must have higher MU than soda drink b. the soft drink must have higher MU than juice c. both must have equal MU d. consumers would buy more soda drink than orange juice e. the consumer would buy twice as much orange juice as soft drink