Answer:
This is the complete answer and answer choices arranged properly
- In explaining the evolution of money:
A) government regulation is the most important factor.
B) commodity money, because it is valued more highly, tends to drive out paper money.
C) new forms of money evolve to lower transaction costs.
D) paper money is always backed by gold and therefore more desirable than checks.
The answer is:
C) New forms of money evolve to lower transaction costs
Explanation:
Money is the current medium of exchange worldwide in the form of coins and banknotes known as currency and varies from country to country. It evolved from being a commodity good, to metallic coin, bank, note, check, and plastic money in the form of cards.
Transactions between individuals were based on trade by barter, a system of exchanging goods between individuals who has a particular good but desire another to exchange the goods he has with another person who has the goods he desires, before the advert of money.
This system of trading by barter is limited in that it only allow for two people who have possession of goods that compliment what the other person is looking for and then locate each other.
With trading by barter, high transaction costs, exchange of goods was difficult and being unable to be carried out.
Money then evolve to lower this transaction costs and make exchange of goods possible without needing to have what another person wants and the trouble of finding them.
The evolution of money allowed individuals to enables and promote economic transactions and lowered the costs ingrained to those operations.
