Which of the following best explains the difterence between commodity money and

Question

Which of the following best explains the difterence between commodity money and fiat money? Commodity money is usually authorized by the central bank, whereas fiat money has to be exchanged for gold by the central bank. Commodity money has no value except a s money, whereas fiat money has value independent of its use as money. Fiat money has no value except a s money, whereas commodity money has value independent of its use as oney. Ail money is commodity money, as it has to be exchanged for gold by the central bank.

Explanation / Answer

Correct Answer:

C. Fiat money has no value except as money, whereas commodity money has value independent of its use as money

Explanation:

Commodity money derives its value from the material that is used to make it. Thus, value of commodity money also depends upon the value of material besides being used as money. Fiat money does not own such benefits. Once the government declares the change of currency or money, existing fiat money will have no value.

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