Question

which most accurately explains why commodity money has value?
commodity money only has value because the government declares that it has value.
commodity money is a good that can be used as a medium of exchange or for some other purpose.
commodity money must be a precious metal that people will value because of its beauty and usefulness.
commodity money only has value because it functions as an efficient medium of exchange.

Explanation:

Commodity money derives its value from its inherent utility as a good, beyond just being a medium of exchange. The first option describes fiat money, not commodity money. The third option is too narrow (commodity money doesn't have to be precious metal, e.g., salt or shells have been used). The fourth option is incorrect because commodity money has value outside of its exchange function.

Answer:

Commodity money is a good that can be used as a medium of exchange or for some other purpose.