5. (10 points)

Your friend owns a cabin in the mountains in Big Bear California that he inherited from his mother. Your friend likes to visit that cabin during the year whenever he wants to. Thus, he leaves it vacant when he is not there. Your friend says that it is an inexpensive way to have short vacations: visit a place he owns.

Please explain why your friend is wrong in stating that this is an inexpensive way to have short vacations.

Please explain what backing U.S. Federal Reserve Notes have today and why people accept them for payment for goods and services.

7. (10 points)