During a widespread power outage that disables all electronic banking and communication networks, a consumer wants to purchase groceries. Which of the following statements accurately analyzes the situation based on the different forms of money?

Comparing Monetary Systems

Match each characteristic to the corresponding form of money.

When a customer withdraws cash from their bank account, the total amount of money held by the public is reduced because the digital bank deposit, which is just a record, is eliminated.

Transforming Money

Evaluating a Cashless System

A physical banknote represents a direct liability of the central bank, whereas a bank deposit, which exists as a digital entry, represents a liability of a __________.

A small business owner receives a payment from a client via a direct bank transfer. The owner then needs to pay a supplier who only accepts cash. The supplier later deposits this cash into their own bank account. Arrange the following events in the correct chronological order to trace the journey of the money from a digital record to a physical object and back to a digital record.

Risk Assessment of Money Forms

An individual holds $1,000 in physical banknotes and has a $10,000 balance in a savings account at a commercial bank. If there are widespread concerns about the financial stability of that specific commercial bank, how does the nature of these two forms of money affect the individual's risk?