It is the oldest form of money. A. So even if it wasn’t used as money, it has value. It is far more convenient to use gold coins that are much lighter and easier to carry. It can’t be arbitrarily created. money without intrinsic value that is used as money because of government decree. More people prefer commodity money instead of fiat money. Fiat money does not have use value, and has value only because a government maintains its value, or because parties engaging in exchange agree on its value. We have to have a specific way of measuring money. 18. a. b. te principal type of money in use today. Fiat money gets its value from a government order (i.e., fiat). D. backed by the good faith and credit of a country. The copper itself could be melted down and would have a separate value. With this, the expression of money’s ‘value’ is sufficient for money to express the value of commodities and so to function as the measure of value, whether money’s own value is real or imaginary. In fact, its origins are virtually impossible to accurately determine. Its intrinsic value is infinitely small. Commodity money is a commodity that has intrinsic value and is used as a median of exchange. This is known as ‘intrinsic value’. A few examples of commodity money are silver, gold, salt, copper, tea, peppercorns, shells, and silk. We can define Commodity money as a physical good that consumers universally use to trade for other goods. For example, gold can can be used in jewellery as well as a money. Please note, this is an example trade – not a recommendation. (Mishkin, 1992, p.25) 4.1 How fiat money has evolved . Commodity money is that type of money that possesses intrinsic value on its own, independent of any governing body. Favorite Answer. The critical thing to note about commodity money is that its value is defined by the intrinsic value of the commodity itself. B) has an intrinsic value. That means it has value in and of itself, with people trading it freely in the knowledge that someone will accept it. The history of commodity money extends beyond centuries and millennia. Commodity money is treated as a means of exchange for purchasing and selling of products. … Some examples of commodity money include:AlcoholCocoa BeansCopperGoldSaltSea ShellsSilverTeaTobacco. 1. As it was a form of money, this inevitably led to inflation. By contrast, other forms of money only derive value from the trust people place in it. Earn a little too. c. commodity money with intrinsic value d. commodity money with no intrinsic value. There are four main characteristics of commodity money – it’s durable, divisible, easily exchangeable, and rare. Asked 10/19/2016 10:43:33 AM. … By contrast, we also have commodity monies such as salt and tobacco, which relies on its consumption and creation. Let’s reiterate the main points of this article: 1. In economics, this is known as ‘intrinsic value’. Their aim was to help improve the efficiency of trading between countries. In the ancient India cow was used as money, in the seashore side fishing hooks and the shells were used as money. An at-the-money option has little to no intrinsic value. Commodity money The different types of goods durable in nature were commodity money used in ancient times. Fiat Money. Commodity money is said to have “intrinsic value” 2. Nevertheless, there are records that indicate activity during the period 700-500BC when gold became a common form of money. ... Weegy: Brigham Young led the Mormons west along the Mormon Trail in 1846. That is to say, the commodity supply must be able to react to increasing demand. Commodity money is money whose value comes from the intrinsic value or use of the object from which it is made. WINDOWPANE is the live-streaming social network that turns your phone into a live broadcast camera for streaming to friends, family, followers, or everyone. This interpretation is derived from S. de Brunhoff’s Marx on Money. Money is historically an emergent market phenomenon establishing a commodity money, but nearly all contemporary money systems are based on fiat money. Relevance. The value of commodity money derives from the substance or use of the money itself for some purpose. Commodity Money: Commodity money is that money whose face value is equal to its commodity value. This means the money itself contains its own worth. By contrast, fiat money only has value that is guaranteed by government. It is not merely a token or representative of financial value as with banknotes or numbers on a computer screen and in a ledger. Commodity money is A. the principal type of money in use today. Which of the following statements about commodity money is TRUE? B. For example, if the stock of XYZ is trading at $50.34, the $45 strike price would be considered to be an in-the-money call option. 2.5K views The best known form is gold or silver coins, though any commodity can fulfill this role. Commodity money obtains value as it is based on a good that has a value outside its use as a currency. It was introduced as an alternative to commodity money and representative money. c. receipts created in … For example, face value of Rs 100 note is Rs 100, but we would get a much lower value if we sell the note as a piece of paper. Money can be a commodity, like gold or silver, can be backed by a commodity, or can be back by the government and have no intrinsic value other than that the government decrees its value. Nevertheless, there was a fundamental issue in the fact that the supply would eventually outstrip the demand; meaning there was a large supply of tobacco and/or salt. The coin has a face value. This is in contrast to representative money, which has little or no intrinsic value but represents something of value, and fiat money, which has value only because it has been established as money by government regulation. Tobacco, gold, and silver are examples of commodity money. I thought it's either B or D, but not sure which one. Gradually, trust in commodities developed over the years. The main difference between commodity and fiat money is that commodity money has an intrinsic value. E) has no value as a commodity. B. receipts created in international trade that are used as a medium of exchange. Commodity money is backed by gold. It is not merely a token or representative of financial value as with bank notes or numbers on a computer screen and in a ledger. In other words, the commodity itself becomes money. It allows two people to trade without needing what the other wants. A 200 carat diamond stumbled upon in the bush is worth no less than an identical one painstakingly mined from kilometres underground. Answer Save. Commodities such as gold are naturally rare, and it is because of this rareness that makes it more valuable and increases its intrinsic value. It is rare. ratio between money and commodity values—is maintained whether money has intrinsic value or not. In commodity money, intrinsic value can be partially or entirely due to the desirable features of the object as a medium of exchange and a store of value. Intrinsic value is the value of a commodity that has dual use. Question. fiat money with no intrinsic value answer: b. Fiat currency: a. has no intrinsic value b. is backed by gold c. has intrinsic value equal to its value in exchange d. is any close substitute for currency such as checkable deposits. In other words, face value of the money like coin was equal to its intrinsic (commodity) value. “Fiat money” has NO intrinsic value (paper dollars) and only a stated value. money with intrinsic value. Gold has moreover been used as money for exchange, as a store of value, and as valuable jewelry and other artifacts. User: in a felony case, the purpose ... Weegy: The legal right to expatriation means that you have the right to: retain your citizenship when living abroad. In other words, it requires…, A market failure is said to occur when there is an inefficient allocation of resources. Source: wikiwand | Licensed under Creative Commons License. c. receipts created in international trade that are used as a medium of exchange. Commodity money is unique in the sense that it is the only form of money that has an underlying value. As a result, we are able to purchase different goods at different prices. 1 Answer. Central Bank. It is also known as full-bodied money. Commodity money: Money that derives its value from the substance or the potential use of the money itself. So when the economy starts to grow; the commodity must be able to supplied and represent the new goods in the market. Gold is commonly used in jewelry, but even people who are not jewelers own gold because they know it is easily sold. Similarly, metals such as iron would not suffice as it rusts easily. A commodity money is a physical good that has ‘intrinsic value’ – a use outside of its use as money. an institution designed to oversee the banking system and regulate the quantity of money. Share what’s outside your window and all around you. money without intrinsic value). Such commodities were not very effective. It for their purposes not used as money on a good that has a use of... 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