Why would commodity money be difficult to use in most societies?

• A. Commodity money can be bulky and hard to transport.
• B. Commodity money always increases in value over time.
• C. Commodity money is universally accepted without any restrictions.
• D. Commodity money cannot be divided into smaller units.

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the concept of commodity money. Commodity money is a type of money that has intrinsic value, meaning the material it is made from (like gold, silver, or other goods) is valuable in itself, not just as a medium of exchange.
2. Step 2: Consider the practical characteristics of commodity money. Since it is made from physical goods, it can be heavy, bulky, and difficult to carry around compared to modern forms of money like paper bills or digital currency.
3. Step 3: Analyze the options given in the problem. For example, commodity money does not always increase in value over time; its value can fluctuate based on supply and demand. Also, commodity money is not always universally accepted without restrictions, as acceptance depends on societal norms and trust.
4. Step 4: Reflect on divisibility. While some commodities can be divided (like gold into smaller pieces), others may be less easily divisible, but this is not the main reason commodity money is difficult to use in most societies.
5. Step 5: Conclude that the main difficulty with commodity money is its physical nature—being bulky and hard to transport makes it inconvenient for everyday transactions, which is why societies often prefer more portable and divisible forms of money.