Question

Suppose a period of continuous political instability leads to people to believe that the economy will slide into a deep recession. As a result, people become more likely to accept ________ money in exchange for goods and services.(A) Flat(B) Commodity

Answer 1

Answer:

Option (B)

Explanation:

If people expect a deep recession coming ahead, they know that fiat (paper) money will lose all its purchasing power. Holding fiat money will not buy them their standard basket of goods & services, so they will prefer to hold commodity money.