Inflation interferes with the functions of money. Which of the three functions is impaired, even when the inflation rate is quite low? Considering higher rates of inflation, which function is affected next?
Which function of money is the last to suffer substantial damage from inflation?
A consequence of even low inflation is to undermine money's function as a store of value. At somewhat higher rates, inflation complicates the use of money as a unit of account, because of increased variability of relative prices. As the inflation rate goes higher, money loses its ability to serve as a medium of exchange.
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When the price of a pizza is $10, the quantity of soda demanded is 300 drinks. When the price of a pizza is $15, the quantity soda demanded is 100 drinks. The cross elasticity of demand is equal to
A) -0.25. B) -0.40. C) -2.50. D) -25.00. E) 4.00.
If a permanent drop in demand causes a monopolist to earn below-normal profits in the long run, this monopolist
a. will always exit the market in the long run b. will be forced by the government to continue operating in the long run c. may continue operating in order to avoid alienating its customers d. will exit the market in the long run only if it cannot cover its fixed costs e. will use limit pricing to reduce the size of its loss