Final answer:
The use of fiat money is best illustrated by option A) Exchanging Canadian dollars for a T-shirt, as fiat money is a government-issued currency not backed by a commodity but accepted as legal tender.
Step-by-step explanation:
The question you've asked pertains to the concept of fiat money, which is a type of currency that is not backed by a physical commodity like gold or silver, but by the trust and authority of the government that issued it. The most straightforward illustration of using fiat money would be option A) Exchanging Canadian dollars for a T-shirt. This example involves using currency that a government has declared to be legal tender, even though it does not have intrinsic value or is not backed by a physical commodity. In contrast, options B and C represent transactions that involve investment vehicles or commodities, option D refers to holding a commodity as a value store, and option E describes bartering, which does not involve money at all.
Fiat money differs from commodity money which has value in itself, like gold, which has been used for its other properties in electronics, aerospace, and jewelry making. Fiat currencies, including Canadian dollars, U.S. dollars, euros, and many others, are used as means of exchange and are accepted for payment because the government maintains their value.