Question

The Race to Develop Digital Currency

This activity is important because, as a manager, you will use money to trade for a good or service. While paper money and coins are the most visible type of currency, they are insignificant when compared to the value of money kept in savings, checking, and other monetary accounts. As global business and technology continue to expand, we must be aware of the issues and benefits of digital currencies.

Read the case and answer the questions that follow.

Several countries have started exploring and using digital currency programs, including the Bahamas, Australia, Malaysia, Singapore, South Africa, and, most noticeably, China. China has opened up its digital currency to foreigners and plans to test this achievement when it hosts the Winter Olympics in Beijing. The United States, by contrast, is just finishing up a multiyear Federal Reserve paper that will begin a major public consultation on central bank digital currencies.

As the world moves away from physical spaces to wireless solutions, the way we pay for things is changing too. Some critics of digital currency, including the American Banking Association (ABA), argue that the benefits are difficult to measure and could create negative consequences for monetary policy. However, others believe that larger banks are resistant to the digital currency because there are fewer profits to make from transactions.

Many countries have long tried to reduce their dependence on the American dollar, which is the primary funding currency for the world. And while the dollar isn't going away anytime soon, China has put itself in a position to lead the discussion on policies and regulations in the global landscape.

_____________, like the dollar and digital currency, is/are the common denominator that allows people to compare different goods and services that can be consumed on a particular income level.

A. Credit cards
B. Money
C. Certificates of deposits
D. Rewards
E. Debit cards

Answer 1

The common denominator that allows for the comparison of goods and services across income levels is Money, represented here as option B. Money serves as a universal medium and measure of value, including in its digital form such as cryptocurrencies and CBDCs.

Step-by-step explanation:

The question asks about the common denominator that allows people to compare different goods and services that can be consumed on a particular income level. The correct option is B. Money. Money is a universal medium of exchange that facilitates the trading of goods and services. It provides a consistent measure of value across diverse products and geographical regions. Digital currencies, including cryptocurrencies and central bank digital currencies (CBDCs), are modern iterations of money that reflect technological advancements and the evolving financial landscape.

Amid the rise of digital currencies such as Bitcoin, we are witnessing a shift from traditional forms of currency to more abstract, digital forms. Cryptocurrencies operate independently of central banks, maintain decentralization, and have value determined by market forces like supply and demand. Nations have various currencies, and the foreign exchange market is where these different currencies are traded. As technology advances and transaction costs of traditional monetary systems increase, digital currencies may further permeate the global economy, potentially transforming the existing financial structures.