Fees Increase Transaction Costs for Payments

Steps:

• Recall that a medium of exchange should facilitate transactions with minimal costs and maximum convenience.
• Evaluate options against key traits: low cost, divisibility, portability, and accessibility.
• Identify factors that hinder ease of use, like added expenses.
• Select the option that raises barriers to frequent or small transactions.

Why A is correct:

• A fee adds transaction costs, violating the low-cost principle of an effective medium of exchange, as defined in monetary economics, making it less desirable for everyday use.

Why the others are wrong:

• B: Supports divisibility, allowing payments for varied values, which enhances acceptability.
• C: Enables 24/7 availability, improving convenience and liquidity.
• D: Boosts portability via mobile access, broadening usability.

Final answer: A