Which of the following are two common arguments for eliminating the penny from circulation in the United States?

• A. The penny is made of valuable metals and is a key part of monetary policy.
• B. The penny costs more to produce than its face value and is inefficient for transactions.
• C. Eliminating the penny would increase inflation and reduce consumer choice.
• D. The penny is the most widely used coin and essential for price stability.

Answer: (B)

Verified step by step guidance

1. Step 1: Understand the context of the problem, which is about the economic arguments related to the elimination of the penny from circulation in the United States.
2. Step 2: Identify the key economic concepts involved, such as production cost versus face value, transaction efficiency, inflation, consumer choice, and monetary policy.
3. Step 3: Recognize that one common argument against the penny is that it costs more to produce than its face value, meaning the government spends more on making pennies than the pennies are worth.
4. Step 4: Understand that another common argument is that pennies are inefficient for transactions because they slow down cash payments and add little value to everyday purchases.
5. Step 5: Evaluate the other options and note that arguments about the penny being essential for monetary policy, increasing inflation, or being the most widely used coin are generally not supported by economic evidence.