ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -What Is 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.

Detailed explanation-2: -Paper money is 100% backed by metallic reserve of either gold or silver and is redeemable at the option of the holder. It is also known as Representative full-bodied money.

Detailed explanation-3: -Silver is an example of commodity money since silver itself is a commodity. Silver is a physical good that is fairly standardized which is shown by its listing on the futures market. This gives silver as a money intrinsic value, unlike fiat money which has no intrinsic value.

Detailed explanation-4: -Early forms of money were often commodity money-money that had value because it was made of a substance that had value. Examples of commodity money are gold and silver coins.