Though Many Assets Can Be Used as a Store of Value

question 140

Multiple Choice

Though many assets can be used as a store of value, money is a particularly attractive method to store value because

• A) it increases in value as prices rise.
• B) its purchasing power does not decline when prices rise.
• C) it is the most liquid of all assets.
• D) it is backed by gold.

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Definitions:

Implicit Costs

The opportunity costs of using resources owned by the firm for its own production instead of earning revenue from these resources elsewhere.

Implicit Cost

The opportunity cost equal to what a firm must give up in order to use resources that it already owns, without directly paying for them.

Leasing

A contractual arrangement where one party (the lessor) grants another party (the lessee) the right to use an asset for a specified period in return for regular payments.

Wages Forgone

The potential earnings that are lost or given up by choosing one alternative over another, often considered in decisions about education or training.