Question

The ease with which an asset can be
A. traded for another asset determines whether or not that asset is a unit of account.
B. transported from one place to another determines whether or not that asset could serve as fiat money.
C. converted into a store of value determines the liquidity of that asset.
D. converted into the economy’s medium of exchange determines the liquidity of that asset.

Answer 1

ANSWER :

D. Converted into country's medium of exchange determines liquidity of the asset

EXPLANATION :

Liquidity is trait of an asset which refers to its ease of being used as a 'medium of exchange' , 'purchasing power tool' . Ex : Monetary currency being legal tender money (i.e legally bound to be accepted) is the most liquid asset . Cheqeuable deposits , plastic money are also relatively liquid . But : Land / Financial Shares might be not that easily convertible into a form of money which can be used as a 'medium of exchange' , ,purchasing power tool'