1. An asset that can easily be exchanged for goods and services is referred to a
ID: 1221902 • Letter: 1
Question
1. An asset that can easily be exchanged for goods and services is referred to as:
a. an intangible asset.
b. wealth.
c. a liquid asset.
d. a fixed asset.
e. an immovable asset.
2. Identify the correct definition of liquidity.
a. The availability of credit in the form of money.
b. The ability of money to be a store of value.
c. The difference between real and nominal money values.
d. The ability of an asset to be easily converted into money.
e. The ability of a precious metal to be converted into spendable bank notes.
3. Which of the following assets would be considered least liquid?
a. A silver coin
b. An antique automobile
c. A U.S. savings bond
d. A debit card
e. A certificate of deposit
4.The concept of double coincidence of wants refers to the fact that:
a. for a financial asset to be exchanged, it needs to be priced correctly.
b. for barter to take place, both parties have to want what the other party has.
c. people can never exactly agree on an equilibrium price.
d. different people value goods differently.
e. for barter to take place, both parties must have equal quantities of the same good.
5.The use of money as a unit of account:
a. discourages specialization and division of labor.
b. inhibits the exchange of goods and services.
c. makes it difficult to compare the relative values of goods and services.
d. lowers information costs relative to barter.
e. relies on the existence of a double coincidence of wants.
6. Using money as a medium of exchange:
a. requires people to match goods wanted with goods available.
b. inhibits economic transactions.
c. reduces the need for barter in the economy.
d. reduces the need for a banking system.
e. reduces the range of feasible exchanges in the economy.
Explanation / Answer
1.) An asset that can easily be exchanged for goods and services is referred to as liquid asset.So correct option is c.
2.) The ability of an asset to be easily converted into money is called liquidity.So correct option is d.
3)An antique automobile is least liquid.So correct option is b.
4)The concept of double coincidence of wants refers to the fact that for barter to take place, both parties have to want what the other party has.So correct option is b.
5)The use of money as a unit of account lowers information costs relative to barter.So correct option is d.
6)Using money as a medium of exchange reduces the need for barter in the economy.So correct option is c.
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