2) Which of the following statements is correct? (2pts) Barter requires a double
ID: 1118864 • Letter: 2
Question
2) Which of the following statements is correct? (2pts) Barter requires a double coincidence of wants, a problem that money avoids. As compared to money, barter requires people to keep track of more relative prices Barter is less efficient than the use of money. All the above. None of the above. 3) Comparing the price of a chicken dinner to the price of a steak dinner and finding that for (2pts) the price of the steak you can buy two chicken dinners illustrates which use of money? medium of exchange unit of account store of value All of the above None of the above 4) "Liquidity" refers to which of the following? (2pts) The resistance of an asset to being eroded by inflation The measurement of the intrinsic value of a commodity money The suitability of an asset to serve as a store of value.Explanation / Answer
2.
In the barter system goods are exchanged for goods, it means it is possible only when there is a double coincidence of wants. It means two people who are engaging in the exchange, must want to trade the same thing what his partner wants.
It means for trading people need to know the relative price of the goods which they are trading.
For example, if 1 book is exchanged for 10 pens, then people must be knowing the relative value which they are trading.
Therefore barter system is less efficient compared to money system.
Hence option first, second and third are correct, Therefore the all of the above is the correct answer.
hence option All of the above is the correct answer.
3
When we use the money for measuring the value of two goods and calculate how much money that goods can be purchased with that money, it is said money is functioning as a unit of account.
Since in the given question by comparing the price of chicken dinner and steak dinner, the consumer calculates how much unit of which dinner can be purchased, with the given amount of money.
Hence money is functioning here as a unit of account.
Therefore option second is the correct answer.
Answer; unit of account
4
Liquidity means how fast a given value of assets can be converted into the money form because money is most liquid assets. With the money, we can purchase anything faster than any other assets.
Therefore option fourth is the correct answer about liquidity because it says that how fast the average unit of money changes hands during the given years, the more liquid is that money or assets.
Ans; how fast the average unit of money changes hands during the given years, the more liquid is that money or assets
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