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JAMB Economics 2001 Question 44

Question 44

Money and Inflation

Money may not be accepted as a store of value if

  1. A.its value is unstable
  2. B.it is easily transferable
  3. C.its value is stable
  4. D.it is easily divisible
Show the answer and explanation

Answer: A (its value is unstable)

Explanation

People only store wealth in money if it keeps its value; if its value is unstable (e.g. high inflation), they prefer other assets.