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

question 100

Multiple Choice

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.

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Definitions:

Benzene

An aromatic hydrocarbon with a ring structure of six carbon atoms bonded in a planar hexagon with alternating single and double bonds.

Benzoic Acid

A simple aromatic carboxylic acid with the formula C6H5COOH, commonly used in food preservation, medicine, and organic synthesis.

5-Oxohexanoic Acid

A keto acid with the formula C6H10O3, featuring a ketone functional group (=O) and a carboxylic acid group (-COOH) in its structure.

1-Methylcyclopentan-1-Ol

A cyclic organic compound consisting of a cyclopentane ring with a methyl group and a hydroxyl group attached to the same carbon atom.