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– Nelson Mandela

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Pop Quiz 4

Pop Quiz 4

Q Pop Quiz #4 1. Why is a nation’s central bank an important institution based on Mankiw’s comments from Ch 29 Why It Matters: Is There Really a Difference Between a Dollar Bill and Play Money? 2. What does happen if the economy has no money as a medium of exchange? Use Concept Clip: Medium of Exchange and Barter in Ch 29. 3. What do we assume in microeconomics and why? Use Concept Clip: Unit of Account in Ch 29. 4. Explain the effect of inflation on the store of value function of money based on Concept Clip: Store of Value and Inflation in Ch 29. 5. Why can be demand deposit qualified as money? You can find answers from Concept Clip: Money and Demand Deposits in Ch 29.

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1 Based on Mankiw’s comments a nation’s central bank is an important institution because its decision are the only ones that could influence the amount of money that circulates in the economy. 2 If the economy has no money as a medium of exchange the economy will fall into a barter system which is trade for good and services.