1. List and explain the functions of money, p. 288.

2. List and explain the components of the money supply, p. 289.

3. List and explain the three ways to determine the value of money p.293.

{ 2880f446 > 2 Aa REVIEW QUESTIONS connect 1. True or False: The term developing country (DVC) is applied to rich nations like the United States and Germany because their economies are always growing quickly by developing new technologies. LO21.1 2. True or False: A DVC that has little in the way of natural resources is destined to remain poor. LO21.2 3. Suppose a country's total output is growing 10 percent per year, but its population is growing 11 percent per year. What will happen to living standards? L0O21.2 a. They will rise. b. They will fall. . They will remain the same. 4. A DVC''s population 1s growing 2 percent per yvear and its output is growing 3 percent per vear. If the government wants to improve living standards over the coming decades, which of the following would probably be the best savings rate for the economy? L021.2 a. 0 percent b. 2 percent . 5 percent d. 10 percent 5. Compare a hypothetical DVC with a hypothetical IAC. In the DVC, average per capita income is $500 per year. In the JAC, average i { 2890f446 > P PROBLEMS connect 1. Assume a DVC and an IAC currently have real per capita outputs of $500 and $50.000, respectively. If both nations have a 3 percent increase in their real per capita outputs, by how much will the per capita output gap change? LO21.1 2. Assume that a very tiny and very poor DVC has income per capita of $300 and total national income of $3 million. How large is its population? If its population grows by 2 percent in some vear while its total income grows by 3 percent, what will be its new income per capita rounded to full dollars? If the population had not grown during the year, what would have been its income per capita? LO21.2 = { 2930f446 > Index Note: Boldface page numbers indicate definitions of key terms; page numbers followed by \"n\" indicate notes. abatement, optimal, 86 ability entrepreneurial, 8 specialization and, 30 absolute advantage, 401-402 acceptability of money, 293 accounting. See growth accounting: national income accounting acquisition costs, 205 actively managed funds, 348, 349, 358 actual GDP, 181-183 adaptive expectations, 388 administered rates, 311 administrative lag, 276 adverse aggregate supply shocks, 372-373, 384