Suppose That the Price of Wheat Has Fallen from $3

question 51

Multiple Choice

Suppose that the price of wheat has fallen from $3 to $2 per bushel and that the price of newsprint has fallen from $200 to $100 per tonne. The relative price of wheat in terms of newsprint

• A)has risen.
• B)has fallen.
• C)cannot be determined from the above data.
• D)is completely unrelated.
• E)remained constant.

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Definitions:

Fractional Reserve System

A banking system in which only a fraction of bank deposits are backed by actual cash on hand and available for withdrawal.

Quartz

A hard, crystalline mineral composed of silicon dioxide, widely used in jewelry and as an industrial abrasive.

Medium Of Exchange

An intermediary instrument used to facilitate the sale, purchase, or trade of goods between parties.

Commodity Money

Money whose value comes from a commodity of which it is made, such as gold and silver, used historically as a medium of exchange.