If fiat money has no value apart from its use as money, how can it be used as a medium of exchange?
What will be an ideal response?
The most important reason paper currency circulates as a medium of exchange is the confidence of consumers and firms that if they accept paper currency they will be able to pass it along when they need to buy goods and services. Also, the federal government has designated it to be legal tender, meaning the government accepts it in payment of taxes and requires it to be accepted in payment of debts.
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An increase in the equilibrium price and a decrease in the equilibrium quantity can be the result of
A) a decrease in demand. B) an increase in supply. C) a decrease in supply. D) an increase in demand. E) None of the above.
Explain the relationship between the real interest rate and the demand for loanable funds. Compare that relationship to the relationship between expected profit and the demand for loanable funds
What will be an ideal response?