The reason we are willing to accept money with no intrinsic value is that
A) paper currency may be exchanged for full-bodied money.
B) the money supply is backed by an equal amount of gold and silver.
C) we have a fiduciary monetary system in which currency is widely acceptable.
D) the value of the money varies directly with changes in the price level.

Question

Quizplus · Accepted Answer

Fiduciary monetary system means that currency is widely accepted and trusted because it is backed by the government's authority and people's belief in its value. This gives paper currency its value, even though it has no intrinsic value. The other options are incorrect: A is only true for convertible currencies, B is no longer true as most economies have abandoned the gold standard, and D is not accurate as the value of money is not directly proportional to the price level.

The Reason We Are Willing to Accept Money with No