Speaking of the Demand for Money

question 57

Multiple Choice

Speaking of the demand for money

• A)makes no sense in a modern society in which most people use credit cards
• B)makes no sense in a modern society in which most people use checks
• C)makes sense in a modern society in which most people use checks,since demand deposits are included in M1,but it does not make sense in a society in which the primary payment is by credit card
• D)makes sense in a modern society in which most people use credit cards,since credit cards are included in M1,but it does not make sense in a society in which the primary payment is by check
• E)is relevant even in a society in which primary payment is by credit card,since eventually all accounts must be settled with money

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Definitions:

Gross Profit

The difference between sales revenue and the cost of goods sold, indicating how efficiently a company is producing or sourcing its products.

Net Income

The amount of money a company earns after subtracting all its expenses from its total revenues.

Acid-test Ratio

A financial measurement of a company's immediate liquidity position, calculated by dividing liquid assets by current liabilities.

Short-term Borrowing

Borrowed funds that are expected to be repaid within a short period, usually one year or less.