One reason that "near-monies" are important is because:
A. They simplify the definition of money and therefore the formulation of monetary policy
B. They can be easily converted into money or vice versa, and thereby can influence the stability of the economy
C. They do not reflect the level of consumer spending but they have a critical impact on saving and investment in the economy
D. Credit cards synchronize one's expenditures and income, thereby reducing the cash and checkable deposits one must hold
B. They can be easily converted into money or vice versa, and thereby can influence the stability of the economy
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The above figure shows a competitive firm's demand for labor assuming that the firm's output sells for $1 per unit. If the wage is $5 per hour, a 2 percent cut in all the workers' income tax will cause the firm to
A) demand less labor. B) demand more labor. C) raise the wage paid to the worker. D) None of above.
If the exchange rate is defined as the price of the foreign currency in terms of the domestic currency, an increase in the exchange rate:
a. increases domestic demand for foreign goods. b. makes domestic goods cheaper in the foreign markets. c. lowers net exports. d. lowers aggregate expenditure on domestic goods. e. increases the domestic country's external debt burden.