Asked by Grace Parker on May 09, 2024
Verified
Money is a good store of value
A) when the average price level is rising.
B) when the economy is experiencing severe inflation.
C) when the average price level is falling.
D) when the unemployment rate is high.
Store of Value
An asset that can be saved, retrieved and exchanged at a later time, and be predictably useful when retrieved.
Price Level
A measure of the average prices of goods and services in an economy, often used to assess inflation or deflation.
Severe Inflation
An extreme rate of inflation, characterized by a rapid and uncontrollable increase in prices, significantly eroding purchasing power.
- Gain an understanding of the nature and operations of money, highlighting its use as an intermediary in trade, a benchmark of value, and a conservator of wealth.
Verified Answer
JC
Jared CousarMay 16, 2024
Final Answer :
C
Explanation :
Money is a good store of value when the average price level is falling because the purchasing power of money increases. In other words, the same amount of money can buy more goods and services when prices are decreasing. In contrast, during periods of inflation (when prices are rising), the value of money decreases over time, making it a less effective store of value.
Learning Objectives
- Gain an understanding of the nature and operations of money, highlighting its use as an intermediary in trade, a benchmark of value, and a conservator of wealth.