An Element of Trust Is Built into Money Because

question 55

Multiple Choice

An element of trust is built into money because

• A) the government maintains a monopoly over the money supply, and people tend to trust monopolies.
• B) one must expect that it will still have value when the holder of money wants to spend it in the future.
• C) people must trust that the government can always print more of it if necessary.
• D) people must trust the Federal Reserve to prevent banks from failing.

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Definitions:

Efficiency Wage Theory

Explanation for the presence of unemployment and wage discrimination which recognizes that labor productivity may be affected by the wage rate.

Productivity

The measure of the efficiency of production, often quantified as output per unit of input.

Wages

Wages are the payments made to labor for their services, typically calculated on an hourly, daily, or piecework basis, and are a primary form of income for employees.

Rules of Thumb

General principles that provide practical instructions or guidelines, typically based on experience rather than theory.