Whatever Functions as Money Must Be _____

question 108

Multiple Choice

Whatever functions as money must be _____.

• A)authorized by the government
• B)accepted as deposit by banks
• C)backed by precious metals like gold or silver
• D)completely indestructible
• E)limited in supply

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Definitions:

Risk Premium

The additional return expected by an investor for taking on a higher level of risk, compared to a risk-free investment.

Nominal Interest Rate

The interest rate in terms of nominal (not adjusted for purchasing power) dollars.

Coupon Rate

A bond’s interest payments per dollar of par value.

Expected Rate of Inflation

An estimate of the rate at which the general level of prices for goods and services will rise over a period.