An asset is said to be illiquid when:
a. it lacks purchasing power.
b. it cannot act as a store of value.
c. it is an illegal tender.
d. it cannot be readily exchanged for goods.
e. it cannot be used to settle debts.
d
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The deflation of the 1930s impacted the U.S. economy because it led some consumers to ________ and because it ________
A) demand higher wages in anticipation of prices eventually rising again; increased manufacturing since firms could afford to hire more labor B) increase purchases to take advantage of the falling prices; increased the burden on lenders C) postpone purchases while they waited for prices to fall even lower; increased the burden on borrowers D) borrow more money since money was now cheap; reduced the amount of money consumers would have to pay back on their outstanding loans
The housing market crash that accompanied the 2007-2009 recession has had severe negative effects on the U.S. economy. Since December 2008, the target federal funds rate has been 0.0-0.25%
Assuming the Fed keeps the real interest rate constant, a recovery in the housing market would cause the ________, and the output gap would ________. A) MP curve to shift up; become less negative B) MP curve to shift down; become more negative C) IS curve to shift to the left; become more negative D) IS curve to shift to the right; become less negative