ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Examples of commodities that have been used as media of exchange include gold, silver, copper, salt, peppercorns, tea, decorated belts, shells, alcohol, cigarettes, silk, candy, nails, cocoa beans, cowries and barley.

Detailed explanation-2: -The term commodity money denotes currency which has material value in itself, in addition to its face value. Examples of commodity money include precious metals, salt, pepper corns, tea, cigarettes, alcohol and decorative rings.

Detailed explanation-3: -Examples of commodity money are gold and silver coins. Gold coins were valuable because they could be used in exchange for other goods or services, but also because the gold itself was valued and had other uses. Commodity money gave way to the next stage-representative money.

Detailed explanation-4: -Gold coins are the best example of commodity money. Commodity money is an asset that is backed by a specific commodity. The commodity is deemed to have an intrinsic value and is not backed by the government decree. Gold coins are commodity money as they are backed by a precious metal, gold, which has a high value.

Detailed explanation-5: -A commodity money is a physical good that has ‘intrinsic value’ – a use outside of its use as money. Historic examples include alcohol, cocoa beans, copper, gold, silver, salt, sea shells, tea, and tobacco.