What is the difference between a fiat money system and a commodity money system?
A) Fiat money has value because people trust it and not because of its raw material, and commodity money is valuable because of the material out of which it is made.
B) Fiat money is valuable because of the material of which it is made, and commodity money has value because people trust it and not because of its raw material.
C) Banks are able to create commodity money through a fractional reserve banking system, but this is not possible with fiat money.
D) Fiat money is money that a government declares to be the official currency of the country regardless of whether the people accept it as money, and commodity money is money that the people of the country accept regardless of whether it is officially declared as the currency.

Question

Quizplus · Accepted Answer

Fiat money's value is based on trust and government decree, not on its physical attributes, while commodity money's value comes from the material it is made of, such as gold or silver.

What Is the Difference Between a Fiat Money System and a Commodity