The Higher and More Unpredictable the Changes in the Monetary

question 77

Multiple Choice

The higher and more unpredictable the changes in the monetary unit, the

• A)lower the opportunity cost of using it as a medium of exchange.
• B)lower the opportunity cost of using it as a store of value.
• C)higher the opportunity cost of using it as a store of value.
• D)less likely barter exchange will replace it.
• E)lower the opportunity cost of using it as a standard of deferred payment.

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Definitions:

Revealed Preferences

A theory that determines preferences by observing consumer choices and behaviors, rather than through direct inquiry about preferences.

Bundle

A collection of goods or services that are sold together as a single package deal.

Weak Axiom

A principle in consumer theory stating that if a consumer prefers bundle A over bundle B when prices are constant, then the consumer will not choose B over A if the price of A decreases and B's price remains unchanged.

Revealed Preferences

A concept in economics that preferences of consumers can be inferred by observing their purchasing habits and behaviors.