Answer:
The question is not complete.
Here is the complete question:
In explaining the evolution of money, the text claims that
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) all of the above are true.
Here is the answer:
C.new forms of money evolve to lower transaction costs.
Explanation:
Before the advert of money, transactions between individuals were based on exchange goods for goods, a system called trade by barter. The system of trade by barter permits individual who has a particular good but desire another to exchange the goods he has with another person who has the goods he desires.
However, this system has a major flaw: transaction costs were higher.
The system of trade by barter only works if the two people involved has complimentary possession of goods that the other wants and be able to locate each other. With this high transaction costs, exchange of goods was difficult to carry out.
On this background, money evolve to lower this transaction costs and make exchange of goods possible without the need to have what another person wants and the trouble of finding where they are.
