What "backs" the money supply?
A. The amount of gold the U.S. government has on deposit at its banks.
B. The fact that the intrinsic value of coins in circulation is greater than their face value.
C. The U.S. government's ability to keep the value of money relatively stable.
D. The fact that currency is issued as Federal Reserve Notes.
Answer: C
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The Coase theorem states that, in the presence of cost externalities, an optimal equilibrium can be attained
A) with government taxation. B) by prohibiting production. C) by correctly defining property rights and through negotiation between the parties. D) None of the above
Given nominal money growth, the amount of seignorage will be greater when
A) tax revenues are higher. B) real money balances are larger. C) the inflation rate is higher. D) foreign lending is higher. E) none of the above