Which of the following provides the best explanation of why money is valuable?
A) Money is valuable because it is declared legal tender by the government issuing it.
B) Money is valuable because it is scarce relative to the demand for the services it provides.
C) Money is valuable because it is backed by precious metals, primarily gold and silver.
D) Money is valuable because it has intrinsic value, independent of its use as a means of exchange.

Question

Quizplus · Accepted Answer

Money is valuable because it is scarce relative to the demand for the services it provides. This means that there is a limited amount of money in circulation, but there is a high demand for it because people use it as a medium of exchange, store of value, and unit of account. Due to this limited supply, money has value in the economy. Governments can also control the supply of money through monetary policy, which affects its value. However, money's value is not based on its intrinsic value or the backing of precious metals necessarily, but rather its usefulness in facilitating transactions and economic activity.

Which of the Following Provides the Best Explanation of Why