7 -If Brazil experienced a period of rapid and unexpected inflation, causing Bra
ID: 1221909 • Letter: 7
Question
7 -If Brazil experienced a period of rapid and unexpected inflation, causing Brazilians to lose confidence in the local currency (real) as a store of value, which of the following would be least likely to occur?
a. The value of the Brazilian real would depreciate on the foreign exchange market.
b. Foreign currency would be used as a substitute for the real.
c. The real would be used as a store of value in other countries
d. Brazilians would save less.
e. The purchasing power of the real would decrease.
8. The use of foreign money instead of domestic money when the domestic economy has a high rate of inflation is called _____.
a. currency depreciation
b. currency substitution
c. capital flight
d. currency devaluation
e. currency trade
9. As a standard of deferred payment, money can be used to:
a. express debt obligations in the form of purchasing power.
b. foster barter activity.
c. facilitate exchanges of goods and services.
d. achieve a common denominator for measuring the value of goods and services.
e. ascertain the liquidity of financial assets.
10. Credit can be described as:
a. money used as a standard of deferred payment.
b. savings made available to borrowers.
c. fiduciary currency.
d. a form of liquid asset.
e. bank loans converted into commodity money.
11.In the United States, the different categories of money supply measurement are based on:
a. the elasticity of money.
b. the liquidity of money.
c. the amount of purchasing power provided.
d. the reserve requirements in the banking system.
e. the velocity of money.
12. Which of the following is a transactions account?
a. Currency
b. Travelers’ checks
c. A savings account
d. A credit card balance
e. A demand deposit
13. Commodity money is money that:
a. has no value as a commodity.
b. is not backed by gold or silver and is not a legal tender.
c. may go out of circulation with an increase in its intrinsic value.
d. always has a face value greater than the intrinsic value.
e. is solely used in barter exchanges.
Explanation / Answer
7 -If Brazil experienced a period of rapid and unexpected inflation, causing Brazilians to lose confidence in the local currency (real) as a store of value, which of the following would be least likely to occur?
a. The value of the Brazilian real would depreciate on the foreign exchange market.
b. Foreign currency would be used as a substitute for the real.
c. The real would be used as a store of value in other countries
d. Brazilians would save less.
e. The purchasing power of the real would decrease.
8. The use of foreign money instead of domestic money when the domestic economy has a high rate of inflation is called _____.
a. currency depreciation
b. currency substitution
c. capital flight
d. currency devaluation
e. currency trade
9. As a standard of deferred payment, money can be used to:
a. express debt obligations in the form of purchasing power.
b. foster barter activity.
c. facilitate exchanges of goods and services.
d. achieve a common denominator for measuring the value of goods and services.
e. ascertain the liquidity of financial assets.
10. Credit can be described as:
a. money used as a standard of deferred payment.
b. savings made available to borrowers.
c. fiduciary currency.
d. a form of liquid asset.
e. bank loans converted into commodity money.
11.In the United States, the different categories of money supply measurement are based on:
a. the elasticity of money.
b. the liquidity of money.
c. the amount of purchasing power provided.
d. the reserve requirements in the banking system.
e. the velocity of money.
12. Which of the following is a transactions account?
a. Currency
b. Travelers’ checks
c. A savings account
d. A credit card balance
e. A demand deposit
13. Commodity money is money that:
a. has no value as a commodity.
b. is not backed by gold or silver and is not a legal tender.
c. may go out of circulation with an increase in its intrinsic value.
d. always has a face value greater than the intrinsic value.
e. is solely used in barter exchanges.
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