Question

1) Which of the follow is the best example of representative money?

Select one:

a. $100 gold coins.

b. T-bonds.

c. Bank notes that are redeemable for gold.

d. Federal Reserve Notes issued in 2007.

2) The ease with which an asset can be converted into a medium of exchange without losing nominal value is know as:

Select one:

a. liquidity.

b. fractionality.

c. money convertibility.

d. asset convertibility.

e. currency convertibility.

3) Money serves as a unit of account (standard of value) because

Select one:

a. prices are quoted in terms of money.

b. it eliminates the problem of a double coincidence of wants.

c. Money does not serve as a unit of account.

d. it can be used for exchanges.

e. its value is preserved between transactions.

4) Money serves as a store of value because

Select one:

a. prices are quoted in terms of money.

b. its value is preserved between transactions.

c. Money does not serve as a store of value.

d. it eliminates the problem of a double coincidence of wants.

e. it can be used for exchanges.

Answer 1

1) Which of the follow is the best example of representative money?

Answer –

a. $100 gold coins.

Objects that have value because the holder can exchange them for something else of value.

2) The ease with which an asset can be converted into a medium of exchange without losing nominal value is known as:

a. liquidity.

The ease with which an asset can be converted quickly into cash with little or no loss of purchasing power. Money is said to be perfectly liquid, whereas other assets have a lesser degree of liquidity.

3) Money serves as a unit of account (standard of value) because

Answer –

a. prices are quoted in terms of money.

It provides a common measure of the value of goods and services being exchanged.

4) Money serves as a store of value because

b. its value is preserved between transactions.

It is used to save purchasing power over time. It also saves power from time income is received until the time it is spent.