Which event indicates that deflation is occurring?
(1 point)
Responses
A savings account can suddenly buy much more than before.
A savings account can suddenly buy much more than before.
The profits of a clothing factory increase rapidly.
The profits of a clothing factory increase rapidly.
The length of time it takes to pay off a home loan decreases by five years.
The length of time it takes to pay off a home loan decreases by five years.
A local store begins offering ice cream bars at two for $5.00 instead of three for $5.00.
Deflation is a decrease in the general price level of goods and services. It means that each unit of currency buys more goods and services than before. So when deflation is occurring, the real value of money increases, as fewer units of currency are needed to purchase the same amount of goods and services.
Among the options presented:
- A savings account can suddenly buy much more than before. (This could be a sign of deflation, as the value of money saved increases, allowing the savings to buy more goods and services than they used to.)
- The profits of a clothing factory increase rapidly. (This might not be directly related to deflation. Profits can increase for various reasons such as increased efficiency, higher demand, or lower costs that are not necessarily linked to a general fall in prices.)
- The length of time it takes to pay off a home loan decreases by five years. (This generally indicates that the borrower is making larger payments, possibly due to lower interest rates or increased income, and not directly deflation.)
- A local store begins offering ice cream bars at two for $5.00 instead of three for $5.00. (This seems like a promotion rather than an indicator of deflation. Promotional offers do not necessarily reflect the overall trend in price levels across the economy.)
The option that directly indicates deflation is:
- A savings account can suddenly buy much more than before.
This is because deflation increases the purchasing power of money, so the money in a savings account would be able to purchase more goods and services than before if deflation is occurring.
pick one of the answers
Apologies for the confusion. The answer that indicates deflation is occurring is:
A savings account can suddenly buy much more than before.
How does money differ from barter?
(1 point)
Responses
Money is mostly important as a way to get goods and services.
Money is mostly important as a way to get goods and services.
Money is used to exchange goods and services.
Money is used to exchange goods and services.
Money has value only because people agree that it has value.
Money has value only because people agree that it has value.
Money has been used for thousands of years.
Money differs from barter in that:
Money has value only because people agree that it has value.
Explanation:
In a barter system, goods and services are directly exchanged for other goods and services without using money as an intermediary. The value of the goods and services in a barter system is subjective and directly related to the items being exchanged.
Money, on the other hand, is a medium of exchange that is widely accepted as payment for goods and services because society has a collective agreement on its value. Money simplifies transactions because it allows for a common measure of value and avoids the complications of bartering, which requires a double coincidence of wants (where two parties each desire what the other has to offer).
It's important to note that while all of the other statements may reflect certain aspects of money, they do not describe how money fundamentally differs from barter. Money has indeed been used for thousands of years and it is used to exchange goods and services, and while it is an important way to get goods and services, these statements don't provide a contrast to the barter system.
pick one of the answer
Money has value only because people agree that it has value.
Bryan needs a new backpack. He compares the prices of three different backpacks at a local store to find the best deal. Which function of money is Bryan demonstrating?
(1 point)
Responses
unit of account
unit of account
store of value
store of value
acceptance of payment
acceptance of payment
medium of exchange
pick one of the answer