Chat with AIExam 2: Money and the Payments System
Describe how money's uses (means of payment, unit of account, and store of value) will likely change in the future.Which feature of money is most likely to be retained over time and why? Why are other features disappearing?
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VerifiedThe use of electronic payments has increased, changing the way we use money as a means of payment.Checks are increasingly being replaced by debit card and electronic payments.The unit of account role of money isn't going to change, but what may change are the actual units used.It is possible that there may be more dispersion in the different units of account, or increased standardization.Money as a store of value has become less and less common over time.There are several other liquid assets that earn some return and that are easily converted into a means of payment.
How has the Bureau of Labor Statistics (BLS) changed the calculation of the CPI in order to take substitution bias into account?
(84) VerifiedSubstitution bias is an overstatement of inflation by the CPI that comes from the fact that the calculation of the index is based on the assumption of an unchanging market basket of goods and services.Since prices do not all rise at the same rate (and some may not rise or may even fall), people can avoid some inflation by changing their spending pattern, that is, substituting lower-priced goods in place of those whose prices have risen.In order to take this into account, the BLS now changes the weights used in the CPI every two years, and today's CPI is a much more accurate measure of inflation than the one published a decade ago.
Considering the roughly $880 billion in U.S.currency held by the public:
(70) VerifiedB
Which of the following would not be considered a characteristic of money?
(95) What was the double liquidity shock that occurred in the US financial system in the summer of 2007?
(71) Money aggregates can best be defined as a set of measures of the amount of:
(74) When the Continental Congress issued currency to finance the Revolutionary War, the Continental Congress:
(66) Many college campuses use student ID cards as a way for students to pay for on-campus expenses, such as books, photocopies, and food.For convenience, some students will maintain a balance on their ID cards.Are these balances a means of payment? Are they a store of value? Explain why or why not.
(83) An individual who stores wealth in art rather than money will find that he/she:
(77) Suppose that in a barter economy Tom bakes bread and Hans produces chocolates.Tom wants chocolates but Hans doesn't like bread, so Hans is unwilling to trade with Tom.Tom's problem is an example of which problem associated with a barter system?
(74) Explain how money solves the problem of the "double coincidence of wants."
(72) Have the growth rates of the two measures of money moved together over time? Explain.
(79) Is the characteristic that distinguishes money from other assets its ability to be a store of value?
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