Dollar bills in the modern economy serve as money because

A) they are backed by the gold stored in Fort Knox.

B) they can be redeemed for gold by the central bank.

C) they have value as a commodity independent of their use as money.

D) people have confidence that others will accept them as money.

Question

Business

Danna Mason

23 October, 00:56

Dollar bills in the modern economy serve as money because

A) they are backed by the gold stored in Fort Knox.

B) they can be redeemed for gold by the central bank.

C) they have value as a commodity independent of their use as money.

D) people have confidence that others will accept them as money.

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Answers (1)

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Sutton · Answer 1

The correct answer is option C.

Explanation:

Dollar bills in the modern economy will be used as money because they serve as a medium of exchange, store of value, and unit of account. They have no independent value as a commodity apart from these uses.

This makes the exchange function of money easier. People will not hoard dollar bills for other purposes as it has no intrinsic value on its own. It is just a piece of paper.

Dollar bills in the modern economy serve as money becauseA) they are backed by the gold stored in Fort Knox.B) they can be redeemed for gold by the central bank.C) they have value as a commodity independent of their use as money.D) people have confidence that others will accept them as money.