Question

Suppose that you buy a new car, and you purchase it with a bag of gold coins minted in a foreign country. Which of the following statements is true about this transaction? Choose one: A. The gold coins are a fiat currency that can be used to purchase a car. B. The gold coins are a commodity-backed money with no intrinsic value. C. This was an illegal transaction because it involved the use of a foreign currency. D. The gold coins are a commodity money because even though they were issued by a foreign government, the gold has intrinsic value. E. The gold coins are not money because, by definition, money cannot have intrinsic value.

Answer 1

Answer:

D. The gold coins are a commodity money because even though they were issued by a foreign government, the gold has intrinsic value

Explanation:

Commodity money is money that has intrinsic value. Its value can be derived from the material from which it is made. E.g. gold, salt, silver

Fiat money is money that has no intrinsic value but the government establishes it as money.

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