Rapid inflation in Brazil in the early 1990s caused the cruzeiro to lose its ability to function as money. Which of the following commodities do you think would most likely have taken the place of the cruzeiro in the Brazilian economy? Explain why.

A. Impressionist paintings because paintings are a good store of value

B. packs of cigarettes because they are a good medium of exchange

C. loaves of bread because the price of bread is relatively constant

D. tractor parts because they are a store of value

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Keith Mahoney

27 February, 11:23

Rapid inflation in Brazil in the early 1990s caused the cruzeiro to lose its ability to function as money. Which of the following commodities do you think would most likely have taken the place of the cruzeiro in the Brazilian economy? Explain why.

A. Impressionist paintings because paintings are a good store of value

B. packs of cigarettes because they are a good medium of exchange

C. loaves of bread because the price of bread is relatively constant

D. tractor parts because they are a store of value

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Answers (1)

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Osvaldo Weeks · Answer 1

B

Explanation:

Anything that fulfills the 3 characteristics of money (medium of exchange, store of value and unit of account can substitute the brazilian cruzeiro

A unit of account and is countable, divisible and fungible, a store of value is something that people use to transfer purchasing power to the future.

Taking this into account the paintings are not good unit of accounts (not divisible), loaves of bread are not a good medium of exchange as well as tractor parts (the first dont last as much time fresh and the seconds are impractical to carry on). This means that packs of cigarettes are the best choice