An important factor in the evolution of commodity money to fiat money is:
A) a desire to reduce transaction costs.
B) a desire to increase transaction costs.
C) the fact that gold is no longer highly valued.
D) a desire to use gold for jewelry.

Question

Quizplus · Accepted Answer

Commodity money, such as gold or silver, required a physical exchange of the commodity for goods and services, which could be costly and time-consuming. Fiat money, which has no intrinsic value, reduces transaction costs because it can be easily exchanged electronically or through paper currency. Therefore, a desire to reduce transaction costs is an important factor in the evolution of commodity money to fiat money.

An Important Factor in the Evolution of Commodity Money to Fiat