the economics of money, banking, and financial markets

66 #

© 2014 Pearson Canada Inc.#

9. 
   

   Which of the following is a true statement?
   A) The conversion of a barter economy to one that uses money increases efficiency by increasing
   the cost of exchange.
   B) The conversion of a barter economy to one that uses money increases efficiency by increasing
   the cost to those who wish to specialize.
   C) The conversion of a barter economy to one that uses money increases efficiency by reducing
   transactions costs.
   D) The conversion of a barter economy to one that uses money does not increases efficiency.
   Answer: C
   Diff: 3 Type: MC Page Ref: 47 - 48
   Skill: Applied
   Objective List: 3.2 Distinguish among the three primary functions of money

   
   


10. 
    

    When economists say that money promotes ____, they mean that money encourages
    specialization and the division of labour.
    A) bargaining
    B) contracting
    C) efficiency
    D) greed
    Answer: C
    Diff: 1 Type: MC Page Ref: 48
    Skill: Recall
    Objective List: 3.2 Distinguish among the three primary functions of money

    
    


11. 
    

    Money ____ transaction costs, allowing people to specialize in what they do best.
    A) reduces
    B) increases
    C) enhances
    D) eliminates
    Answer: A
    Diff: 1 Type: MC Page Ref: 48
    Skill: Applied
    Objective List: 3.2 Distinguish among the three primary functions of money

    
    


12. 
    

    All of the following are necessary criteria for a commodity to function as money except
    ____.
    A) it must deteriorate quickly
    B) it must be divisible
    C) it must be easy to carry
    D) it must be widely accepted
    Answer: A
    Diff: 1 Type: MC Page Ref: 48
    Skill: Recall
    Objective List: 3.2 Distinguish among the three primary functions of money