The essential difference between paper money and coins as forms of money is that
A) paper money serves as a unit of account while coins do not.
B) the metallic content of coins makes them more acceptable as money.
C) paper is paper and not metal. The metal is more durable.
D) paper money issued by the Federal Reserve Board is backed by gold while coins are not.
Question 2
John gets paid monthly and pays for everything with cash. When he cashes his check he keeps 200 for food, 100 for utilities, 900 for rent, 50 for transportation, 100 for entertainment and 300 for unexpected expenditures.
Which of the following statements is TRUE?
A) The transactions demand for money is 1,350, the precautionary demand is 300 and the asset demand is 0.
B) The transactions demand for money is 350, the precautionary demand is 1,150 and the asset demand is 150.
C) The transactions demand for money is 350, the precautionary demand is 950 and the asset demand is 0.
D) The transactions demand for money is 450, the precautionary demand is 300 and the asset demand is 900.
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