Which of the following best describes commodity money?

• A. Money that is backed solely by government decree and has no intrinsic value.
• B. Money that has intrinsic value and can be used for purposes other than as a medium of exchange, such as gold or silver.
• C. Money that is used only for international trade between countries.
• D. Money that is created electronically by banks and does not exist in physical form.

Answer: (B)

Verified step by step guidance

1. Understand the concept of commodity money: it is a type of money that has intrinsic value, meaning the money itself is valuable beyond just being a medium of exchange.
2. Recognize that commodity money can be used for purposes other than as money, such as gold or silver being used for jewelry or industrial uses.
3. Contrast commodity money with fiat money, which is money that has no intrinsic value and is backed solely by government decree.
4. Identify that electronic money or money used only for international trade does not fit the definition of commodity money.
5. Conclude that the best description of commodity money is money that has intrinsic value and can be used for purposes other than as a medium of exchange.