Barter works best
In the absence of a double coincidence of wants
When many different product are available in the economy when money is relatively available to establish relative prices
When money is relatively available to establish relative prices
When each trader has what the other wants and wants what the other has
Monetary policy is controlled by
Central government
State government
Central bank
Private sector
Under the pure gold standard
Circulating notes are fully backed by gold.
The authorities can easily manipulate the money supply
Price stability is difficult to achieve
The power of monetary policy is unlimited
“Bad money drives good money out of circulation.” This is a statement of
Monetary policy rule.
Okun’s law.
Gresham’s law.
The paradox of thrift
M3 and M4 measure of money supply is
Narrow
Broad
Liquid
Least liquid
What are the modern forms of money?
Currency
Plastic money
Demand deposits
All the above
A situation marked by rising prices and stagnation in demand is known as
Cost-push inflation
Demand – pull inflation
Stagflation
Wage – push inflation
For an asset to act as money, the asset must
Be legally accepted as a medium of exchange
Be commonly accepted by the public as a medium of exchange
Have a physical existence
Be made out of or fully backed by a precious metal
The essential characteristic required before any substance can function as money is that
It be issued by the government
It be backed by a precious metal
The supply of it be unlimited and uncontrolled
People accept it as money
During inflation
Businessman gain
Wage earners gain
Salaried people gain
Rentiers gain
