This document of ECO 316 Week 1 Chapter 2 Money and the Payments System shows the solutions to the following problems:

2.1 Multiple Choice Questions

1) Many economists argue that the gain to European countries from all of them using the same currency

2) The common currency in Europe is called the

3) When was the common European currency introduced?

4) Movements in the money supply are associated with

5) The most important reason why economies at an early stage of development tend to operate inefficiently is that

6) By "specialization" economists mean a situation where

7) The most important economic benefit from specialization is that it

8) When an economy relies on specialization,

9) Fundamentally, to reap the benefits of specialization, an economy must

10) Barter is

11) Under a system of barter

12) Which of the following is an example of a barter transaction?

13) In a barter system individuals

14) A system of barter has substantial transactions costs because

15) Under a barter system

16) How many prices would there be in a barter economy with 10 goods?

17) The problem of a double coincidence of wants refers to

18) Andy can't make a deal with Danny. Andy has a Barry Bonds baseball card and would like to trade it to Danny for Danny's Albert Pujols card, but Danny doesn't want a Barry Bonds card. Andy's problem illustrates the drawback to a barter system known as

19) Which of the following is NOT a significant cost that a barter system imposes on an