Author Question: Commodity money is money that: a. has no value as a commodity. b. is not backed by gold or silver ... (Read 280 times)

Ebrown · **on:** Jun 30, 2018

Commodity money is money that:
a. has no value as a commodity.
b. is not backed by gold or silver and is not a legal tender.
c. may go out of circulation with an increase in its intrinsic value.
d. always has a face value greater than the intrinsic value.
e. is solely used in barter exchanges.

Question 2

In the three months before a 1 per pack cigarette tax took effect in Alaska, smokers bought 175 million more cigarettes than during the same period a year earlier. What explains this behavior by consumers?

jennafosdick · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

c

Answer to Question 2

The increase of 1 per pack is pretty significant given the price of cigarettes. Many smokers may have decided that the best way to save money would be to stockpile cigarettes before the expected tax increase took effect. So an expectation of a price increase in the near future caused the current demand curve for cigarettes to shift to the right (an increase in demand).