Question

1. A permanent increase in a country's money supply

	a) causes an inversely proportional fall in its price level.
	b) leaves its price level constant in long-run equilibrium.
	c) causes a less than proportional increase in its price level.
	d) causes a proportional increase in its price level.
	e) causes a more than proportional increase in its price level.

2. Which of the situation below does not show how money is being used to characterize a function of money?

	a) All of the above illustrate a function of money
	b) Canada's GDP is measured in dollars
	c) Sally buys a coffee with change
	d) Kelly trades her bicycle for John's skateboard
	e) Harry puts $200 in his bank account. He's saving up tp buy an iPhone

Answer 1

Answer 1

The correct option is d) causes a proportional increase in its price level

The money supply is all the currency and other liquid instruments in a country's economy on the date measured. The money supply roughly includes both cash and deposits that can be used almost as easily as cash.

Answer 2

The correct option is a) All of the above illustrate a function of money

because functions of money include the medium of exchange, Measure of value, Store of value.