Which of the Following Best Illustrates the Unit of Account

question 267

Multiple Choice

Which of the following best illustrates the unit of account function of money?

• A) You list prices for candy sold on your Web site,www.sweettooth.com,in dollars.
• B) You pay for your theater tickets with dollars.
• C) You keep 6 ounces of gold in your safe-deposit box at the bank for emergencies.
• D) None of the above is correct.

Interpret the concept of national saving and its equivalence to investment in a closed economy.

Clarify misconceptions regarding government purchases, taxes, and public saving in a closed economy.

Analyze the effects of fiscal policy on loanable funds, interest rates, and investment.

Distinguish between different financial instruments and their roles in the economy.

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Definitions:

Accumulated Depreciation

It refers to the total amount of depreciation expense that has been recorded against an asset over its useful life until the present time.

Fixed Asset Account

An account on the balance sheet representing long-term tangible assets held for business use and not expected to be converted to cash in the near term.

Accumulated Depreciation Account

A balance sheet item representing the cumulative amount of depreciation expense charged against an asset over its useful life.

Book Value

Refers to the net value of an asset as recorded on the balance sheet, calculated as the original cost minus accumulated depreciation and impairment.