The evolution of the payments system from barter to precious metals, then to fiat money, then to cheques can best be understood as a consequence of ________.
A) government regulations designed to improve the efficiency of the payments system
B) government regulations designed to promote the safety of the payments system
C) innovations that reduced the costs of exchanging goods and services
D) competition among firms to make it easier for customers to purchase their products

Question

Quizplus · Accepted Answer

The evolution of the payments system can best be understood as a consequence of innovations that reduced the costs of exchanging goods and services. For example, the use of precious metals as a means of payment was more efficient than barter because it reduced the need for direct exchange of goods. Similarly, the use of fiat money and cheques was more efficient than precious metals because it reduced the cost of carrying and exchanging heavy and bulky metal coins. This evolution was driven by technological advancements and market forces rather than government regulations or competition among firms.

The Evolution of the Payments System from Barter to Precious