In which of the following ways are a fiat money system and a commodity money system different?
A) Commodity money is valuable because of the material of which it is made, and fiat money has value because people trust it.
B) Fiat money is valuable because of the material of which it is made, and commodity money has value because people trust it.
C) Commodity money is created by banks through a fractional reserve banking system, and this is not done with fiat money.
D) Commodity money is accepted by the people of the country even though it is not official currency, and fiat money is declared by a government to be the official currency of the country.

Question

Quizplus · Accepted Answer

Commodity money has intrinsic value due to the material it is made from (e.g., gold or silver), whereas fiat money's value comes from the trust and recognition it is given by the government and its users, not from its physical properties.

In Which of the Following Ways Are a Fiat Money