The Major Problem of a Currency That Is Fractionally Backed

question 87

Multiple Choice

The major problem of a currency that is fractionally backed and convertible into a precious metal is that of

• A)clipping,which debases the metal coins.
• B)counterfeiting.
• C)maintaining its convertability into the metal.
• D)paper money being less durable than gold.
• E)perennial shortages of paper currency.

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Definitions:

Cost Formula

An equation used to determine the total cost of production, which includes fixed and variable costs.

Activity Data

Information related to the actions or operations of a business, which may include sales, production, or other operational metrics.

High-low Method

A method employed in managerial accounting that calculates variable and fixed costs by analyzing the highest and lowest activity levels.

Variable Cost

Variable Cost consists of expenses that vary directly with levels of production or sales volume.