1. The idea that money is money because the government says so is called....
Commodity money |
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Fractional reserve system |
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Liquidity |
2. Which of the following statements is FALSE?
Deflation is good for lenders |
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Deflation leads consumers to expedite their spending |
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High deflation leads to domino effects of firm failures |
The idea that money is money because the government says so is called commodity money.
Commodity money is a type of good that functions as currency. Money is currency.
Answer -2 ) The statement High deflation leads to domino effects of firm failures is FALSE.
High inflation leads to domino effect.
First is true because Deflation benefits thelender because the real value of the loan increases due to price deflation.
Second is also true, it helps in acceleration of spending
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