A . Explain why paper money doesn't have to be backed by gold or other valuable goods in order to be valuable. b. Is there a disadvantage to using fiat money? Explain
a . As long as people have confidence that paper money will serve the functions of money, then they will
be willing to accept it and so it will have value.
b. Yes. There is nothing to limit the supply of fiat money. If overprinting occurs, then the value of the fiat
money will diminish.
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"As part of the financial crisis bailout plan in 2009, the Federal Reserve bought stakes in banks. This policy will result in an increase in the inflation rate." This is an example of
A) a positive statement. B) a normative statement. C) a microeconomic statement. D) an economic model.
____ is the price at which an intermediate good or service is transferred from the selling to the buying division within the same firm
a. Incremental price b. Marginal price c. Full-cost price d. Transfer price e. none of the above