Question

1. The idea that money is money because the government says so is called.... Commodity money...

1. The idea that money is money because the government says so is called....

Commodity money

Fractional reserve system

Liquidity

2. Which of the following statements is FALSE?

Deflation is good for lenders

Deflation leads consumers to expedite their spending

High deflation leads to domino effects of firm failures
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Homework Answers

Answer #1

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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