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© 2014 Pearson Canada Inc.#
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
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
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
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