A system of barter has substantial transactions costs because
A) taxes under such a system are generally a large fraction of the value of output.
B) traders must spend considerable time searching for trading partners.
C) the uncertainties of trade result in high legal fees being incurred to draw up binding contracts.
D) the uncertainties of trade result in high insurance premiums.
B
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When a commercial bank lends $1000 to a customer, and the loan proceeds are spent by the customer, the legal reserves of the banking system
A) decline by $1000. B) do not change unless the loan proceeds are withdrawn in currency. C) rise by $1000. D) rise by more than $1000 because spending increases nominal GDP.
Crowding out occurs when the government
a. reduces the level of the national debt, forcing up interest rates b. balances the budget, increasing the value of government bonds and thereby causing consumption to fall c. borrows money to finance the national debt, forcing up interest rates, causing private investment to fall d. borrows money to finance the national debt, causing interest rates to fall causing private investment to fall e. borrows money to finance the national debt, forcing up interest rates, causing consumption to fall