One of the benefits of money as a medium of exchange is that
A. it allows individuals to compare the relative value of goods.
B. it allows for specialization that leads to economic efficiencies.
C. it allows for private transactions such as trading vegetables for medical services.
D. over time it will become more valuable so that individuals can purchase more goods and services.
Answer: B
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As the relative price of a good falls, the substitution effect implies that people buy
A) less of that good and more of its substitutes. B) more of that good and less of its substitutes. C) less of that good and less of its substitutes. D) more of that good and more of its substitutes.
An increase in the production of capital goods
A) must increase the current production of consumer goods. B) must decrease the future production of consumer goods. C) shifts the production possibilities frontier inward in the future. D) shifts the production possibilities frontier outward in the future.