When a nation's official money fails to serve as a medium of exchange,
A)nothing will replace money to help facilitate exchange
B)there will be an increase in economic efficiency
C)resources must be diverted from production to exchange
D)transactions costs of exchange will decrease
E)fewer barter exchanges will be completed

Question

Quizplus · Accepted Answer

If the official money fails to serve as a medium of exchange, resources that would have gone into production must be diverted to facilitate exchange through other means. This is likely to result in a decrease in economic efficiency as resources are spent on exchange rather than on production.

When a Nation's Official Money Fails to Serve as a Medium