Question

Compared to barter system, a monetary system _________.

• A. increases transaction costs.
• B. decreases the number of transactions
• C. requires that prices be negotiated for every transaction.
• D. reduces transactions costs and facilitates exchanges.

Answer 1

The correct option is D reduces transactions costs and facilitates exchanges.

The reason that people value money is that it allows for complex exchanges to take place more easily than using barter.

The use of money reduces the transaction costs and facilitates exchanges as money accepted by all and has a standard unit of measurement.