Imagine an Economy in Which: (1)pieces of Paper Called Yollars

question 55

Multiple Choice

Imagine an economy in which: (1) pieces of paper called yollars are the only thing that buyers give to sellers when they buy goods and services,so it would be common to use,say,50 yollars to buy a pair of shoes; (2) prices are posted in terms of yardsticks,so you might walk into a grocery store and see that,today,an apple is worth 2 yardsticks;and (3) yardsticks disintegrate overnight,so no yardstick has any value for more than 24 hours.In this economy,

• A)the yardstick is a medium of exchange but it cannot serve as a unit of account.
• B)the yardstick is a unit of account but it cannot serve as a store of value.
• C)the yardstick is a medium of exchange but it cannot serve as a store of value,and the yollar is a unit of account.
• D)the yollar is a unit of account,but it is not a medium of exchange and it is not a liquid asset.

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