We Say That Money Is a Unit of Account Because

question 23

Multiple Choice

We say that money is a unit of account because it:

• A) represents a certain amount of purchasing power held over time.
• B) can be used to purchase goods and services.
• C) holds a fixed value over time.
• D) provides a standard unit of comparison.

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Definitions:

Tax Rates

The segment of earnings an individual or corporate entity owes to the government in taxes.

Interest Tax Shield

The saving in taxes due to deductible interest expenses, which reduces taxable income and ultimately decreases the tax liability.

Financial Risk

Financial Risk refers to the possibility of losing money on financial investments or transactions due to market fluctuations, credit issues, or other factors.

Cost of Equity

The return a company requires to decide if an investment meets capital return requirements.