Question

articles from PageOne Economics “Bitcoin: Money or Financial Investment?”

After reading the article, complete the following:

1. Most people hold Bitcoin in

   1. an account at their local bank.

   2. the coin pouch in a wallet.

   3. a jar on their dresser.

   4. a virtual wallet.

2. Because Bitcoin can be used to buy goods and services, it serves as a

   1. medium of exchange.

   2. transfer payment.

   3. unit of account.

   4. store of value.

3. The value (in dollars) of Bitcoin fluctuated dramatically in 2017. For savers, this has diminished its function as a

   1. medium of exchange.

   2. transfer payment.

   3. unit of account.

   4. store of value.

4. The value (in dollars) of Bitcoin fluctuated dramatically in 2017. For people trying to quote the prices of goods and services, this has diminished its function as a

   1. medium of exchange.

   2. transfer payment.

   3. unit of account.

   4. store of value.

5. Bitcoin transactions often involve “middlemen” and transaction fees for people buying goods and services. This has diminished its function as a

   1. medium of exchange.

   2. transfer payment.

   3. unit of account.

   4. store of value.

6. Why is it hard to spot a financial bubble?

1. It is difficult to determine the proper value of an asset.

2. It is difficult to buy some assets.

3. It is difficult to sell some assets.

4. Bubbles often deflate quickly.

7. Given the way people have used Bitcoin to earn a profit, many people (including Janet Yellen) believe Bitcoin is being used primarily as

   1. a collectible, like antique coins to a coin collector.

   2. a financial investment.

   3. computer code.

   4. money.

8. What is the most important aspect of the “greater fool theory” of investing?

   1. You can diversify investment options to ensure all your eggs are not in a single basket.

   2. The “intrinsic” value of an asset is the most important aspect of investing.

   3. A fool and his money are soon parted—so keep it in a savings account.

   4. You have a “greater fool” willing to buy the asset at a higher price.

Answer 1