Following the 2007-2009 financial crisis, many people feared that Greece might leave the euro and resume using the drachma. If that happened, the drachma might be worth less than the euro
When using fiat money like the drachma, the key to acceptance is that households and firms have confidence that if they accept drachma in exchange for goods and services, the drachma will not lose much value during the time they hold them. If sellers were not willing to accept the drachma in exchange for goods and services, the drachma would not serve as
A) a medium of exchange. B) fiat money.
C) legal tender. D) a unit of account.
A
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The Federal Reserve cut the federal funds rate seven times between September 2007 and March 2008. What event led the Fed to make these reductions in the federal funds rate?
A) The chairman of the Federal Reserve System persuaded members of the Federal Open Market Committee to lower interest rates in order to reduce the price of oil in international markets. B) During this period there was a substantial reduction in the demand for housing. C) It was in response to reductions in the discount rate, which was also lowered seven times over the same time period. D) Several large investment banks failed during this time period.
Conflicts of interest is a type of ________ problem that occurs when a person or institution has multiple objectives that are in conflict with each other
A) moral hazard B) adverse selection C) risk sharing D) spinning