ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A type of money that can be used as an economic good is known as commodity money because commodity money has some intrinsic value and it is a commodity that is considered as the money to exchange other goods and services.

Detailed explanation-2: -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.

Detailed explanation-3: -Commodity money is money whose value comes from a commodity of which it is made. Commodity money consists of objects having value or use in themselves (intrinsic value) as well as their value in buying goods.

Detailed explanation-4: -Money is a commodity accepted by general consent as a medium of economic exchange. It is the medium in which prices and values are expressed. It circulates from person to person and country to country, facilitating trade, and it is the principal measure of wealth.

Detailed explanation-5: -If a gold coin is produced, its worth would be determined by the price of gold rather than by its face value. Commodity money was created as a practical means of exchange because it outperformed the barter trading system. The disadvantage of commodity money is that it faces a lot of fluctuations in price.