Malik invests his money in an institution that purchases very risky yet potentia

Question

Malik invests his money in an institution that purchases very risky yet potentially very profitable assets such as currency swaps and derivatives. What institution did Malik invest in?

a. A Hedge Fund

b. Insurance Company

c. A Commercial Bank

In 2012, the government increased its debt by $60 billion and it spent $230 billion. How much revenue did the government receive in 2012?

Select one:

a. $290 billion

b. $260 billion

c. $200 billion

d. $170 billion

e. It is impossible to determine

d. A Credit Union

e. An Investment Bank

Tim is paying for a fine for his speeding violation in court by using his debit card. Tim is using money as:

Select one:

a. A unit of standardization

b. A medium of penalization

c. A unit of account

d. A medium of exchange

e. A store of value

Grapes make a poor form of money because:

Select one:

a. They have a high opportunity cost

b. They are not portable

c. They are not durable

d. They are not uniform

e. They have an odd shape

Explanation / Answer

1.) answer is hedge fund

reason: A hedge fund is an investment fund that pools capital from accredited individuals or institutional investors and invests in a variety of assets, often with complex portfolio-construction and risk-management techniques. assets in which a hedge fund invests includes equities, fixed income, futures, options and swaps, derivaties.

2. answer is 170000

reason: we know, fiscal deficit = total expenditure - total receipts other than borrowings

60000 = 230000 - total receipts other than borrowings

170000 = total receipts

3. answer is store of value

reason: paying fine through debit card indicates the function of store of value of money as storing value in debit card is like storing wealth . it was not convenient to store value in the barter syastem of exchange as goods tend to perish . stored wealth is a source of future investment ( here investment is in paying fine otherwise he could have been behind bars). this stored wealth in debit card has provided him with a way to transfer the purchasing power from present to future.

4. answer is they are not durable

reason: using grapes as a form of money is a poor form because grapes is a perishable commodity. it will decay quickly. and we want something that is non- perishable and also can be stored as wealth. money and not grapes serves this function well of STORE OF VALUE.

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