Question

Why is the life span of a $1 note likely to be lesser than that of a $100 note?

a) $1 notes are more durable
b) $1 notes are less frequently used
c) $1 notes are exposed to more wear and tear
d) $1 notes are stored more carefully

Answer 1

The life span of a $1 note is shorter than a $100 note due to more frequent use and exposure to wear and tear, whereas $100 notes are used less often and handled more carefully. Option d

Step-by-step explanation:

The life span of a $1 note is likely to be shorter than that of a $100 note because $1 notes are exposed to more wear and tear. Smaller denominations like $1 bills are used more frequently in everyday transactions, leading to faster physical degradation. In comparison, $100 notes are circulated less often and tend to be stored more carefully, thus reducing the rate at which they wear out.

Inflation does affect the value of money over time, making loans worth less in real terms because they can be repaid with money that has diminished purchasing power. However, the interest rates and inflation are separate from the physical wear and tear of currency notes.

Also, the concept of M1 and M2 money supply, while important for economic analysis, is not directly relevant to the life span of physical notes. Option d