Question

1. Dan compares the rent of different apartments. He is using money as: a. A Medium...

1. Dan compares the rent of different apartments. He is using money as:

a. A Medium of Exchange

b. A Store of Value

c. An element of Liquidity

d. Dan is not using money

e. A Unit of Account

2. Which of the following is an example of digital money?

a. Rice

b. Silver coin

c. Ethereum

d. Transfer money from two bank accounts using Zelle

e. $10 bill

3. Cindy uses money from a checking account to invest in a money market fund. What happens to M1 and M2 as a result

a. M1 and M2 will both increase

b. M1 and M2 will both decrease

c. M1 will decrease but M2 will not change

d. M1 will not change, but M2 will increase

e. M1 will increase but M2 will decrease

4. Soil is not a good form of money because it is not:

a. Relatively Scarce

b. Portable

c. Uniform

d. Durable

e. Divisible

5. Which of the following assets is the least liquid one?

a. Cryptocurrency

b. A Boat

c. Certificate of Deposit

d. Government Bonds

e. Money Orders

Business   Economics   
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Homework Answers

Answer #1

Q1) The answer is (e) unit of account as rent of different apartments is mentioned in money terms which can then be easily compared. Thus money is acting as an unit of account

Q2) The answer is (d) Transfer money from two bank accounts using Zelle as Zelle allows online transfer of money without the need to exchange physical money and is thus a form of digital money.

Q3) The answer is (c) M1 will decrease but M2 will not change, Checking account is included in M1 and thus using money from checking account reduces M1. Since, M2 includes all of M1 and money market funds, a decrease in M1 and an increase in money market funds keeps M2 unchanged.

Q4) The answer is (b) portable. It is not easy to carry sand from one place to another as there is a high chance that it will reduce in quantity in the process of moving around. Thus, it is not portable and can not be used as money.

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