The evolution of the payments system from barter to precious metals,then to fiat money,then to checks can best be understood as a consequence of
A)government regulations designed to improve the efficiency of the payments system.
B)government regulations designed to promote the safety of the payments system.
C)innovations that reduced the costs of exchanging goods and services.
D)competition among firms to make it easier for customers to purchase their products.

Question

Quizplus · Accepted Answer

The evolution of the payments system has been driven by innovations that have reduced the costs of exchanging goods and services. Barter was the earliest system, but it had significant drawbacks such as the need for a double coincidence of wants. Precious metals emerged as a medium of exchange because they could be easily divided, stored, and transported. However, carrying heavy metals was risky, and coins could be easily debased. Fiat money became the next logical step because it was portable, divisible, and could be easily recognized. Checks emerged as a further innovation because they allowed for electronic payments, reducing the need to carry physical currency. Governments have regulated these systems, but they were not the driving force behind their evolution.

The Evolution of the Payments System from Barter to Precious