Asked by Tristen Peterson on Jul 02, 2024
Verified
One problem with fiat money,as compared to commodity money,is that:
A) more resources are used to create fiat money.
B) there is frequently too little fiat money available.
C) there is a greater potential for inflation with fiat money.
D) fiat money must be turned in to the government to receive the commodity on which it is based.
E) fiat money is less divisible than commodity money.
Commodity Money
Money whose value comes from a commodity of which it is made, such as gold or silver, with intrinsic value.
Fiat Money
A form of money officially accepted as legal tender, not supported by a real commodity, as declared by authorities.
Inflation
The rate at which the general level of prices for goods and services is rising, leading to a decrease in purchasing power.
- Identify the challenges and potential issues associated with fiat money compared to commodity money.
Verified Answer
KG
Katie Graber6 days ago
Final Answer :
C
Explanation :
Fiat money is not backed by a physical commodity like gold, making it more susceptible to inflation as the government can print as much as they want, leading to a decrease in the value of the currency.
Learning Objectives
- Identify the challenges and potential issues associated with fiat money compared to commodity money.