Answer: The US dollar was used in Israel as Unit of Account and Store of Value during late 1970s. Explanation: During the late 1970s, prices quoted in terms of the Israeli currency rose so fast, that the groceries started listing prices in Dollars instead of Shekel and provided the customers with the dollar-shekel conversion tables that they updated daily. Though the purchases were made by Israelis in shekels, many of them converted shekels to dollars to avoid loss of real value of the shekels held due to inflation. Since all prices were quoted in dollars the US dollars function as the unit of account in account during this period. Though it was not used as the medium of exchange as all transactions were made in shekels, it was used as the store of value as local currency was converted into US dollars to retrieve it for future use and prevent the value of their wealth in reducing in real terms.

Question

Want to see the full answer?

Answer 1

Question

Chapter 15, Problem 2P

To determine

Concept introduction:

Answer:

The US dollar was used in Israel as Unit of Account and Store of Value during late 1970s.

Explanation:

During the late 1970s, prices quoted in terms of the Israeli currency rose so fast, that the groceries started listing prices in Dollars instead of Shekel and provided the customers with the dollar-shekel conversion tables that they updated daily. Though the purchases were made by Israelis in shekels, many of them converted shekels to dollars to avoid loss of real value of the shekels held due to inflation. Since all prices were quoted in dollars the US dollars function as the unit of account in account during this period. Though it was not used as the medium of exchange as all transactions were made in shekels, it was used as the store of value as local currency was converted into US dollars to retrieve it for future use and prevent the value of their wealth in reducing in real terms.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Wolfgang is a typical producer in a perfectly competitive piano industry (i.e., all other producers of pianos face the same costs as Wolfgang). The following production and cost data apply to the long run as well as the short run. Fixed costs (rent) are unrecoverable in the short run and are equal to $2400 per month. Variable costs consist of raw materials (wire, wood, plastic), which cost $1000 per piano, and the $40 per hour opportunity cost of Wolfgang's time. Wolfgang's production function is given in the table at right. Wolfgang will shut down if the price per piano is less than OA. $3000. B. $4000. O C. $5000. ○ D. None of the above. Pianos (Q) Hours (L) Raw Materials ( 0 0 0 1 100 1000 2 150 2000 3 240 3000 4 400 4000

P2 P₁ $ per unit Using the graph below, determine which statement is TRUE. MC1 SRATC₁ Q1 Q₂ MC2 SRATC2 LRAC ✓ LEA Quantity

Using the grapns below, wnicn snow the snort-run cost curves for 3 perfectly competitive firms in the same industry, determine whether the industry is in long-run equilibrium or not. Q Q Firm A QA MC ATC Output Firm B QB MC ATC Firm C MC ATC Output Output Qc If Firms A, B and C are in the same industry, is this industry in long-run equilibrium? ○ A. Yes, because P = MC = MR for each of the 3 firms. ○ B. No, because Firm A is not producing at a profit-maximizing level of output. ○ C. Yes, because all 3 firms are producing at their minimum average total cost. OD. The answer is uncertain since it's unknown whether the firms are producing at the minimum efficient scale or not. ○ E. No, because if the industry were in equilibrium, all 3 firms would be earning zero economic profits.