The Ease with Which an Asset Can Be

question 60

Multiple Choice

The ease with which an asset can be

• A)traded for another asset determines whether or not that asset is a unit of account.
• B)transported from one place to another determines whether or not that asset could serve as fiat money.
• C)converted into a store of value determines the liquidity of that asset.
• D)converted into the economy's medium of exchange determines the liquidity of that asset.

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Definitions:

Price Decrease

A reduction in the cost of goods or services compared to previous prices.

Treasury Bonds

Long-term government debt securities with maturity dates typically beyond 10 years, regarded as low-risk investments.

Default Risk

The probability that a borrower will be unable to meet the required payments on their debt obligations.

Maturity Risk

The risk associated with the fixed term of securities; the risk that bond prices will decrease because of rising interest rates as maturity approaches.