Question

QUESTION 43

1. When money functions as a means of telling you that your textbook costs $150, then it is performing as a:

   		medium of exchange.
   		unit of account.
   		store of value.
   		standard of investment.

1 points   

QUESTION 44

1. Which of the following is an example of money serving as a store of value?

   		buying a hamburger
   		a $35 price tag
   		a collection of $10 bills hidden in your sock drawer.
   		paying your friend for his car

1 points   

QUESTION 45

1. “Liquidity” refers to:

   		the relative ease with which an asset can be converted to something else without loss of value.
   		the relative ease with which an asset can be transported.
   		how easy it is to increase the supply of an asset, especially that of money.
   		how quickly the value of an asset changes in response to changes in supply and/or demand.

1 points   

QUESTION 46

1. Banks hold reserves in order to:

   		cover their customers' withdrawal needs.
   		cover the banks' investments.
   		offset their liabilities.
   		satisfy stockholders.

Answer 1

Question 43

In this case, money is being used to state the relative value of a good in monetary terms.

When money is used to state the value of good then money acts as unit of account.

So, in given case, money is performing as a unit of account.

Hence, the correct answer is the option (b) [Unit of Account].

Question 44

Store of value function of money indicates the use of money to hold purchasing power.

In other words, when money is kept to be used at a future time period, it is said to be performing store of value function.

So, a collection of $10 bill hidden in your sock drawer is an example of money serving as a store of value.

Hence, the correct answer is the option (c).

Question 45

'Liquidity' implies the relative easiness of an asset to be converted into money.

In other words, liquidity is the relative ease with which an asset can be converted to something else without loss of value.

Hence, the correct answer is the option (a).

Question 46

Banks are mandated to hold a part of their deposits as required reserves.

These can not be utilized for making loan.

The premise behind such action is that banks need cash to honor the withdrawal request of its customer and to keep the trust and stability in the banking system.

So,

Bank hold reserves in order to cover their customers' withdrawal needs.

Hence, the correct answer is the option (a).