BNAD 301 Chapter 3 Homework Questions | Study Guide, Solutions & Business
Review
Properly categorize each of the following concepts as stock variable or flow variable:
Debt
Money
Income
Savings deposits
Wealth - ✔✔Debt: Stock Variable
Money: Stock Variable
Income: Flow Variable
Savings Deposits: Stock Variable
Wealth: Stock Variable
Debt - ✔✔What you owe—the accumulation of spending over and above periodic earnings.
Money - ✔✔A tool used to facilitate transactions, store wealth, or to be used as a yardstick to
compare values.
Income - ✔✔Earnings received from working, property rentals, entrepreneurship, or the
ownership of financial assets.
Savings - ✔✔The difference between what is earned and what is spent. This adds to total
wealth.
, Wealth - ✔✔What you own—the total collection of assets that serve to store value. This
includes not only money but also other assets such as bonds, common stock, art, land,
furniture, cars, and houses.
In prison, cigarettes are sometimes used among inmates as a form of payment. All of the
following explain how cigarettes solve the "double coincidence of wants" problem, even if a
prisoner does not smoke, except:
A. prisoners can exchange cigarettes for other goods and services.
B. exchanging cigarettes for other goods and services increases transaction costs.
C. cigarettes are widely accepted as a form of payment in prison.
D. cigarettes serve as a medium of exchange. - ✔✔B. exchanging cigarettes for other goods
and services increases transaction costs.
Brooke accepts money in exchange for performing her daily tasks at her office, since she knows
she can use that money to buy goods and services.
In this case, money is being used as a: - ✔✔medium of exchange
Tim wants to calculate the relative value of oranges and apples, and therefore checks the price
per pound of each of these goods quoted in currency units.
In this case, money is being used as a:
. - ✔✔unit of account
Review
Properly categorize each of the following concepts as stock variable or flow variable:
Debt
Money
Income
Savings deposits
Wealth - ✔✔Debt: Stock Variable
Money: Stock Variable
Income: Flow Variable
Savings Deposits: Stock Variable
Wealth: Stock Variable
Debt - ✔✔What you owe—the accumulation of spending over and above periodic earnings.
Money - ✔✔A tool used to facilitate transactions, store wealth, or to be used as a yardstick to
compare values.
Income - ✔✔Earnings received from working, property rentals, entrepreneurship, or the
ownership of financial assets.
Savings - ✔✔The difference between what is earned and what is spent. This adds to total
wealth.
, Wealth - ✔✔What you own—the total collection of assets that serve to store value. This
includes not only money but also other assets such as bonds, common stock, art, land,
furniture, cars, and houses.
In prison, cigarettes are sometimes used among inmates as a form of payment. All of the
following explain how cigarettes solve the "double coincidence of wants" problem, even if a
prisoner does not smoke, except:
A. prisoners can exchange cigarettes for other goods and services.
B. exchanging cigarettes for other goods and services increases transaction costs.
C. cigarettes are widely accepted as a form of payment in prison.
D. cigarettes serve as a medium of exchange. - ✔✔B. exchanging cigarettes for other goods
and services increases transaction costs.
Brooke accepts money in exchange for performing her daily tasks at her office, since she knows
she can use that money to buy goods and services.
In this case, money is being used as a: - ✔✔medium of exchange
Tim wants to calculate the relative value of oranges and apples, and therefore checks the price
per pound of each of these goods quoted in currency units.
In this case, money is being used as a:
. - ✔✔unit of account
