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 has value because the holder can exchange it for something else of value.

Detailed explanation-3: -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-4: -In modern economies, the medium of exchange is currency.

Detailed explanation-5: -Commodity money consists of objects having value or use in themselves (intrinsic value) as well as their value in buying goods.