In times of economic uncertainty, what can happen to the value of cash?

In times of economic uncertainty, the value of cash can indeed lose value if trust in the currency declines. This scenario often occurs during periods of inflation, political instability, or financial crises, when people may fear that the currency will not hold its value. When confidence in a currency decreases, it can lead to a decrease in demand for that currency, causing its value to drop. As consumers and investors start to doubt the stability of the currency, they may seek alternatives such as foreign currencies, commodities like gold, or other investments, further exacerbating the decline in the currency's value.

In contrast, the other choices reflect different aspects that do not directly apply in the context of economic uncertainty. For example, the idea that cash may become more stable generally does not hold true during turbulent times; instead, it is often the opposite. While cash is typically considered a stable asset, during uncertainty, its purchasing power can wane if inflation rises. Similarly, cash's universal acceptance does not change based on trust; rather, it depends on the currency itself and the economic system in which it operates. Finally, the assertion that cash increases in purchasing power is usually inaccurate in these circumstances, as inflation tends to erode purchasing power when economic conditions are unstable. Thus,