Question

Inflation affects money by increasing money's efficiency as a medium of exchange limiting money's role as...

Inflation affects money by

increasing money's efficiency as a medium of exchange

limiting money's role as a store of value

reducing the supply of money

reducing transactions and search costs

Homework Answers

Answer #1

Answer: Limiting money's role as a store of value?

Explanation: Inflation is a general rise in prices of products and services within an economy in a particular year, as compared to the previous year. During inflation, the value of money falls as many people get a lot of currency money and hence the demand for goods and services rise. This leads to higher demand and limited supply and thus rising prices. So, the money's role as a store of value becomes limited.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Money is defined as a medium of exchange, unit of account and store of value. Explain...
Money is defined as a medium of exchange, unit of account and store of value. Explain these in details
Indicate which of the functions of money (a medium of exchange, a unit of account, and...
Indicate which of the functions of money (a medium of exchange, a unit of account, and a store of value) each of the following performs in the U.S. economy. Check all that apply. Medium of Exchange Unit of Account Store of Value Plastic credit card House Mexican peso Demand deposit Given your answers to the previous task, indicate whether each of the following is considered money in the U.S. economy. Money Yes No Plastic credit card House Mexican peso Demand...
Money has several roles. Which role is the demand for money based on? a. primarily on...
Money has several roles. Which role is the demand for money based on? a. primarily on money’s role as a store of wealth b. primarily on money’s role as a standard of value c. primarily on money’s role as an interest-bearing asset d. primarily on money’s role as a medium of exchange
Money can be used as a medium of exchange, unit of account and store of value....
Money can be used as a medium of exchange, unit of account and store of value. Question 1 options: True False Question 2 (1 point) If it is difficult to convert an asset into a country's medium of exchange, we say that asset is liquid. Question 2 options: True False Question 3 (1 point) If money has no intrinsic other than the value goverment gives it, we call the money fiat money. Question 3 options: True False
People can reduce the inflation tax by a. increasing deductions on their income tax. b. reducing...
People can reduce the inflation tax by a. increasing deductions on their income tax. b. reducing savings. c. None of the above is correct. d. reducing cash holdings When the value of money is on the vertical axis, the money supply curve is vertical and shifts right if the Federal Reserve buys bonds. a. True b. False
Please answer all questions, thanks. 1. The advantage of money as a store of value is...
Please answer all questions, thanks. 1. The advantage of money as a store of value is that: A. It is the only asset that never loses its value. B. Its value does not diminish as inflation accelerates. C. Its value is guaranteed by the government. D. It provides investors with a high return. E. It provides the convenience of being already in the form that it can be used as a medium of exchange. 2. When money allows us to...
1) Good money functions as a a. means of exchange, unit of account, and store of...
1) Good money functions as a a. means of exchange, unit of account, and store of value. b. valuable commodity like gold, silver, gem diamond, and so on. c. fiat, even if some may not accept it as a medium of settling debt. d. All the above answers are correct. 2) Which policy tool does the Fed often use to change the quantity of money in the economy? a. Open market operations. b. The discount rate. c. The required reserve...
answer the following questions Q21.When the economy experiences an expansion, it is most likely the case...
answer the following questions Q21.When the economy experiences an expansion, it is most likely the case that------------------------------- GDP is increasing, unemployment is increasing, and inflation is decreasing. GDP is increasing, unemployment is decreasing, and inflation is increasing. GDP is decreasing, unemployment is decreasing, and inflation is increasing. GDP is decreasing, unemployment is decreasing, and inflation is decreasing. Q22. GDP is an important economic measurement because it provides valuable data on unemployment rates measures the combined total of all intermediate and...
Question 1 Which of the following is demand-pull inflation associated with? a. decreasing aggregate demand and...
Question 1 Which of the following is demand-pull inflation associated with? a. decreasing aggregate demand and lower unemployment b. increasing aggregate demand and lower unemployment c. decreasing aggregate demand and greater unemployment d. increasing aggregate demand and greater unemployment Question 2 Which of the following is a strategy a bank might use in order to meet a deficiency of excess reserves? a. deposit vault cash with the Bank of Canada b. convert some of its deposit at the Bank of...
Which one of the following statements is true? Select one: a. Traditional Keynesian analysis indicates that...
Which one of the following statements is true? Select one: a. Traditional Keynesian analysis indicates that increases in government purchases are a more potent tool than decreases in taxes. b. According to Keynesians, fiscal policy is the first line of defense against economic downturns. c. Advocates of sacrifice ration claim that a zero-inflation target imposes only small costs on society. d. Sacrifice ration implies that a credible commitment to reducing inflation can lower the costs of disinflation by inducing a...