If full-employment GDP is equal to 4.2 trillion, what does the ...

[sc00by25]

If full-employment GDP is equal to 4.2 trillion, what does the long-run aggregate supply curve look like?
 
  A) It is a vertical line at a level of GDP above 4.2 trillion.
  B) It is a vertical line at 4.2 trillion of GDP.
  C) It is a horizontal line at 4.2 trillion of GDP.
  D) It is a vertical line at a level of GDP below 4.2 trillion.

Question 2

Although gold is highly valued by most people, it is difficult to use as a medium of exchange. Explain.
 
  What will be an ideal response?

[tennis14576]

Answer to Question 1

B

Answer to Question 2

Gold is an example of commodity money. The problem with commodity money is that its value depends upon the quality of the commodity. The higher the quality, the higher the value. It violates one of the 5 criteria that make a commodity suitable to use as a medium of exchange. If someone wanted to cheat another in a trade involving gold, the person could mix impure metals with precious metals. The purity would have to be checked at each trade.
Gold is also heavy. For large transactions transport of the metal required might be difficult.