Chapter 5R, Problem 8MCQ

To determine

The correct option that defines the example of a unit of account.

Answer to Problem 8MCQ

Option b is correct.

Explanation of Solution

Explanation for the correct option:

b.

As a unit of account function of money, value in monetary terms is assigned to the value so that economic calculations can be done easily. Buying candy worth $10 is an example of a unit of account as a certain amount is given. Therefore, option b is correct.

Explanation for incorrect options:

a.

There is no certain amount mentioned in this example where a T-shirt is bought. Therefore, option a is incorrect.

c.

The amount of dollars received each year is not mentioned here. Therefore, option c is incorrect.

d.

Money as a function of a unit of accounts certifies the value in numbers. Here, the amount that is to be saved is not given. Therefore, option d is incorrect.

e.

The amount paid for lunch using a debit card is not mentioned. Therefore, option e is incorrect.

Economics Concept Introduction

Financial system: Financial system refers to the system that facilitates the borrower to borrow capital and the investors to invest their savings in the financial market.

Liquid asset: An asset can be referred to as a liquid asset if it can be converted into cash easily without any loss in its value.