Using the five criteria in the book, explain how U.S. currency is suitable to use as a medium of exchange
What will be an ideal response?
1. Dollars are acceptable to most traders, either in exchange for goods and services or as payment of debts.
2. Coin and currency in circulation are of standardized quality. Bills of the same denomination are identical in appearance.
3. Coins and currency in circulation are durable: their value is not altered by spoilage.
4. Dollars are light in weight so that they are very valuable relative to their weight and they are easily transported.
5. Finally, dollars are divisible.
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Your textbook uses supply and demand curves together to illustrate
A) the level of output needed by individuals. B) the level of output needed by society. C) how economists are necessary to make markets to work effectively. D) how market prices play a key role in coordinating the plans of sellers and buyers. E) all of the above.
When the price of a good changes, the total effect of the price change on the quantities purchased can be found by comparing the quantities purchased
A) on the old budget line and the new budget line. B) on the original indifference curve when faced with the original prices and when faced with the new prices. C) on the new budget line and a hypothetical budget line that is a parallel shift back to the original indifference curve. D) on the new indifference curve.