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:

Lender Of Last Resort

An institution, typically a country's central bank, that offers loans to banks or other financial institutions that are experiencing financial difficulty or are considered highly risky.

Open-Market Purchase

The buying of government securities by the central bank from the market to increase the money supply and decrease the interest rate.

Store Of Value

An asset that can be saved, retrieved, and exchanged in the future without significantly losing value.

Currency

The system of money in common use in a country, which facilitates the exchange of goods and services.