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Posted 2 months ago

Which of the following best explains why a $20\$ 20 bill is money but a share of stock is not money?

Choose 1 answer:
(A) The $20\$ 20 bill can be used as a medium of exchange, but the share of stock cannot be used to purchase anything.
(B) The $20\$ 20 bill does not earn income, but the share of stock does earn income.
(c) The $20\$ 20 bill is an illiquid asset, but the share of stock is a liquid asset.
(D) The $20\$ 20 bill is a store of value, but the share of stock is risky.
(E) The $20\$ 20 bill is not an asset, but a share of stock is an asset.
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Answer from Sia
Posted 2 months ago
Solution by Steps
step 1
Identify the characteristics of money that differentiate it from other assets: money must serve as a medium of exchange, a unit of account, a store of value, and be liquid
step 2
Evaluate the characteristics of a $20 bill: it is widely accepted as payment for goods and services, making it a medium of exchange
step 3
Evaluate the characteristics of a share of stock: it is not generally accepted as payment for goods and services and is typically used as an investment rather than a medium of exchange
step 4
Compare the characteristics of the $20 bill and the share of stock to the options provided in the question
Answer
The correct answer choice is the one that states the $20 bill can be used as a medium of exchange, which is a defining characteristic of money, while a share of stock cannot be used to purchase anything directly.
A
Key Concept
Medium of Exchange
Explanation
A $20 bill is considered money because it can be used directly to purchase goods and services, fulfilling the medium of exchange function of money. A share of stock, while it may hold value and can be sold for money, is not used as a medium of exchange in everyday transactions.

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