Which of the following is a characteristic of paper money?
A)It has a high intrinsic value.
B)It is used in a barter economy.
C)It is valuable because it is generally accepted in trade.
D)It is valuable only because of the legal tender requirement.

Question

Quizplus · Accepted Answer

Paper money does not have a high intrinsic value, meaning its physical value is low compared to its face value. It is not used in a barter economy but rather in an economy based on currency exchange. It is valuable because it is generally accepted in trade as a medium of exchange and a store of value, meaning that people trust that it can be used to purchase goods and services and hold its value over time. Legal tender laws require acceptance of paper money for payment of debts, but its broader value in trade comes from its widespread acceptance.

Which of the Following Is a Characteristic of Paper Money