Question

Consider Figure 15-1, which focuses on liquidity. How might the limited acceptability of old masters' paintings in exchange and difficulties in predicting the values of these paintings from year to year help to explain their relatively low liquidity? How might these characteristics affect the likelihood that these assets could function as forms of money?

Short answer

Since their value fluctuates and the liquidity is also low it is less likely that these assets could function as forms of money

Step-by-step solution

introduction 

Liquidity alludes to the ease with which a resource, or security, can be changed over into prepared cash without influencing its market cost. Cash is the most fluid of resources, while unmistakable things are less fluid. The two fundamental sorts of liquidity incorporate market liquidity and bookkeeping liquidity.

explanation

Paintings are not valued by everybody. Along these lines, relatively few are keen on purchasing old expert artworks. Furthermore, these canvases are sold through barters. Subsequently, they don't have a proper cost. Cash is a mechanism of trade. Anything is generally satisfactory as a trade-off for labour and products. The old expert canvases have restricted adequacy. Plus, their qualities vacillate. These qualities confine their adequacy as a mechanism of trade. Along these lines, the capacity of old experts' artistic creations to act as cash is restricted.