Which form of money came into existence because of goldsmiths' receipts?

• A. Commodity money
• B. Electronic money
• C. Banknotes (paper money)
• D. Barter system

Answer: (C)

Verified step by step guidance

1. Understand the historical context: Goldsmiths in earlier times stored gold for individuals and issued receipts as proof of deposit. These receipts were easier to carry and trade compared to physical gold.
2. Recognize the transition: Over time, these receipts began to be accepted as a medium of exchange because they represented a claim to a specific amount of gold held by the goldsmith.
3. Identify the form of money: The receipts issued by goldsmiths evolved into what we now know as banknotes or paper money, as they were backed by the gold reserves held by the issuer.
4. Differentiate from other forms of money: Commodity money refers to items with intrinsic value (like gold itself), electronic money is digital currency, and the barter system involves direct exchange of goods and services without a medium like money.
5. Conclude the concept: Banknotes (paper money) came into existence because of goldsmiths' receipts, marking a significant development in the history of money and financial systems.