Which of the following is NOT a problem associated with commodity money?

• A. It may be difficult to transport in large quantities.
• B. It can be easily debased or diluted.
• C. It has no intrinsic value.
• D. Its value can fluctuate with changes in supply and demand.

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the definition of commodity money. Commodity money is a type of money that has intrinsic value, meaning the money itself has value apart from its use as money (e.g., gold, silver, or other valuable goods).
2. Step 2: Identify common problems associated with commodity money. These typically include difficulty in transportation due to weight or bulk, the possibility of debasement or dilution (reducing the purity or quality of the commodity), and fluctuations in value due to changes in supply and demand.
3. Step 3: Analyze each option in the problem statement to see if it fits as a problem of commodity money:
4. - "It may be difficult to transport in large quantities" is a known issue because commodities like gold or silver are heavy and bulky.
5. - "It can be easily debased or diluted" is also a problem because the commodity's quality can be altered, reducing its value.
6. - "Its value can fluctuate with changes in supply and demand" is true since commodity prices can vary based on market conditions.
7. - "It has no intrinsic value" contradicts the definition of commodity money, which by definition has intrinsic value, so this is NOT a problem associated with commodity money.