ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Representative money is a certificate or token that can be exchanged for the underlying commodity. For example, instead of carrying the gold commodity money with you, the gold might have been kept in a bank vault and you might carry a paper certificate that represents-or was “backed"-by the gold in the vault.

Detailed explanation-2: -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-3: -Representative money, on the other hand, is a form of currency that represents the intent to pay. The most widely used representative money example is a basic cheque. Apart from cheques, there are a few other types of representative money. These include credit cards, money orders and bank drafts.

Detailed explanation-4: -More specifically, the term representative money has been used variously to mean: A claim on a commodity, for example gold and silver certificates. In this sense it may be called “commodity-backed money". Any type of money that has face value greater than its value as material substance.

Detailed explanation-5: -It is accepted as money as it can be conveniently used for carrying out transactions. Such money is 100% backed by metallic reserve of either gold or silver and is fully convertible into full bodied money at the option of the holder due to which it is also known as Representative full-bodied money.