The goldsmith's ability to create money was based on the fact that a. paper money in the form of gold receipts was rarely redeemed for gold. b. the goldsmith was required to keep 100 percent gold reserves. c. withdrawals of gold tended to exceed deposits of gold in any given time period. d. consumers and merchants preferred to use gold for transactions, rather than paper money.
In the past, individuals preferred the use of gold for day to day exchange, buying and selling . Due to this need for a medium of exchange, Goldsmith's were given the task of crafting money for people.
