When the Soviet Union Began Breaking Up in the Late

question 102

True/False

When the Soviet Union began breaking up in the late 1980s, cigarettes began replacing the ruble as the medium of exchange, even though the ruble was legal tender. The cigarettes provide an example of fiat money.

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Definitions:

Consumption Good

A good that is utilized by consumers to satisfy their current wants or needs.

Utility Function

A mathematical representation of how consumers rank different bundles of goods or services according to their level of satisfaction or utility.

Budget Constraint

The limitation on the consumption bundles that a consumer can afford given their income and the prices of goods.

Optimum Market Basket

The combination of goods and services that maximizes a consumer’s utility for a given income and prices, representing the most preferred point on their budget line.