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Q1: As a medium of exchange, money plays an important role in the development of the economy. Define money and explain how money as a medium of exchange facilitates transactions in the economy. (5 marks) What is a stock? How do stocks affect the economy? (5 marks) Q2: Q3: Some economists suspect that one of the reasons that economies in developing countries grow so slowly is that they do not have well-developed financial markets. Does this argument make sense? (5 marks) Q4: What the theory of asset demand tells us about the quantity demanded of an asset? (5 marks) Why are financial markets important to the health of the economy? (5 marks) Q5: Q6: Q7: How many prices must a barter economy have if the economy has six goods? What if it has 100 goods? Explain why having a money in the second case is beneficial. (5 marks) Which of the Central Bank's measures of the monetary aggregates -- M1 or M2- is composed of the most liquid assets? Which is the largest measure? (5 marks) If you suspect that a company will go bankrupt next year, which would rather hold, bonds issued by the company or equities issued by the company? Why? (5 marks) 08: Q9: When the American dollar worth more in relation to currencies of other countries, would an American be more likely to buy American-made or foreign-made jeans

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