Imagine an Economy in Which: 1) Pieces of Paper Called

question 468

Multiple Choice

Imagine an economy in which: 1) pieces of paper called dollars are the only thing that buyers give to sellers when they buy goods and services, so it would be common to use, say, 50 dollars to buy a pair of shoes; 2) prices are posted in terms of yardsticks, so you might walk into a grocery store and see that, today, an apple is worth 2 yardsticks; and 3) yardsticks disintegrate overnight, so no yardstick has any value for more than 24 hours. In this economy,

• A) the yardstick is a medium of exchange but it cannot serve as a unit of account.
• B) the yardstick is a unit of account but it cannot serve as a store of value.
• C) the yardstick is a medium of exchange but it cannot serve as a store of value, and the yollar is a unit of account.
• D) the yollar is a unit of account, but it is not a medium of exchange and it is not a liquid asset.

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Definitions:

Accounting Abuses

refers to the manipulation or misrepresentation of financial records and reports to conceal the actual financial condition or performance of an entity.

Overcharging Clients

The unethical practice of charging clients more than is fair or initially agreed upon for services or goods.

Fee-splitting

The practice of dividing professional fees for services with someone who referred a client or patient, often seen in the medical field.

Insider Trading

The illegal practice of trading on the stock exchange to one's own advantage through having access to confidential information.