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:

Pericycle

A layer of cells in plant roots, located just inside the endodermis, involved in the formation of lateral roots and sometimes contributing to secondary growth.

Cladode

A type of stem that resembles a leaf, functioning in photosynthesis, found in plants such as cacti and certain succulents.

Photosynthetic Stem

A stem that performs photosynthesis, similar to leaves, commonly found in plants living in arid environments.

Succulents

Plants with thick, fleshy parts adapted to store water, enabling them to survive in arid conditions.