Question

What is a difference between fiat and commodity money? Choose one: A. Inflation occurs only in an economy that relies on commodity money. B. Fiat money resolves the double coincidence of wants, whereas commodity money does not. C. Tying an economy’s money to a commodity has no dangers, whereas the use of fiat money is very dangerous. D. Fiat money allows an economy to easily expand the money supply, whereas it is more difficult to expand the supply of commodity money. E. Fiat money has a higher intrinsic value than commodity money.

Answer 1

D. Fiat money allows an economy to easily expand the money supply, whereas it is more difficult to expand the supply of commodity money. the fiat money can be anything that is declared as money by the government hence its not difficult to expand it unlike the commodity money.