What is meant by representative money?
Representative money is government-produced money backed by a physical commodity such as precious metals. Other forms of representative money are still in place, including financial instruments like checks and credit cards.
What is an example of representative money in economics?
Representative money is a well-known form of money. It is money (normally paper money) that can be exchanged for the commodity behind it. Modern examples of representative money are credit cards and checks, and traditional examples include gold, tobacco, and copper.
What’s the difference between commodity money and representative money?
Commodity money is an item used for money that has intrinsic value. Representative money is an item such as a token or piece of paper that has no intrinsic value, but can be exchanged on demand for a commodity that does have intrinsic value.
Why is it called representative money?
Representative money or receipt money is any medium of exchange, printed or digital, that represents something of value, but has little or no value of its own (intrinsic value).
What is representative money quizlet?
Representative money is an item such as a token or piece of paper that has no intrinsic value, but can be exchanged on demand for a commodity that does have intrinsic value, such as gold, silver, copper, and even tobacco.
What are the advantages of representative money?
Because representative money is tied to a physical object, it is less prone to depreciation by inflation. With a representative money system, the government cannot just print as much money as they want. The amount of money they can print is limited by the amount of the commodity they have.
Why is representative money important?
What are the four types of money?
The 4 different types of money as classified by the economists are commercial money, fiduciary money, fiat money, commodity money. Money whose value comes from a commodity of which it is made is known as commodity money.
Which of the following is an example of representative money quizlet?
Using corn, cattle, or cotton as a medium of exchange is an example of (representative money/Commodity money).
Why is representative money more useful?
What are two major disadvantages of representative money?
There are also disadvantages to using representative money, such as the fact that it can be subject to inflation. Additionally, if the government were to collapse, the value of the currency would likely plummet.
Which of the following is an example of representative wealth?
An example of representative money is a cheque. Representative money is a medium of exchange, printed on paper that represents something of value, but doesn’t have its value of any kind. A cheque is representative money as it represents the value of money and is printed on paper but does not have its value.
When was representative money used?
Eventually, starting in 1861, the federal government started issuing its own notes, that were backed by government bonds held at the United States Treasury. Silver certificate of deposit, printed in 1880, a form of representative money that could be redeemed for 10 silver dollars.
What are the 4 types of money?
What are the five forms of money?
That means that anything can technically be considered money, but the most accepted kind today comes in the form of paper, coins (metallic money), and credits (backed by banks). There are 5 different types of money in the world: Fiat, commodity, representative, fiduciary, and commercial bank money.
What is the classification of money?
Money is classified on the basis of the relationship between the value of money as a commodity and the value of money as money. It can be broadly classified as: Full-bodied Money. Representative Full-bodied Money.
Why is representative money more useful than commodity money?
Representative money and credit money are more efficient than commodity money because they are superior media of exchange and units of account.
Why is paper money called fiat money?
Fiat money is a government-issued currency that is not backed by a commodity such as gold. Fiat money gives central banks greater control over the economy because they can control how much money is printed. Most modern paper currencies, such as the U.S. dollar, are fiat currencies.
When was the concept of representative money first used?
The imperial taka was officially introduced by the monetary reforms of Muhammad bin Tughluq, the emperor of the Delhi Sultanate, in 1329. It was modeled as representative money, a concept pioneered as paper money by the Mongols in China and Persia.
What are representative notes?
Notes Representative means the Trustee or holder(s) of a majority of the outstanding principal amount of Notes.
What are the 3 categories of money?
Economists differentiate among three different types of money: commodity money, fiat money, and bank money. Commodity money is a good whose value serves as the value of money.
What are the 4 common definitions of money?
In Money and the Mechanism of Exchange (1875), William Stanley Jevons famously analyzed money in terms of four functions: a medium of exchange, a common measure of value (or unit of account), a standard of value (or standard of deferred payment), and a store of value.
What are the 3 different types of money?
Economists differentiate among three different types of money: commodity money, fiat money, and bank money.
What are the examples of fiduciary money?
Generally, fiduciary money is paid in gold, silver, or paper money. Cheques and bank notes are examples of fiduciary money because they are both tokens that are used as money and have the same value. Fiduciary money’s value is determined by the expectation that it will be widely accepted as a medium of exchange.
What is fiduciary money?
Fiduciary money, or currency, refers to banknotes and coins in circulation in the economy. This is the liquidity available to economic actors to carry out transactions. It is a means of payment. Currency is tangible property, unlike scriptural money which is immaterial.