ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Some of it was commodity money-money that has an alternative use as a commodity, or an economic good or service. Many products served as commodity money. These included corn, hemp, gunpowder, and musket balls. These items could be used to pay debts and make purchases.

Detailed explanation-2: -Commodity money is also know as standard money because it is the monetary unit which is approved by the government to act as the legal tender in the currency system and in which other types of money in the economy like bank draft, promissory not etc. is convertible.

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: -Mutual credit is a form of alternative currency, and thus any form of lending that does not go through the banking system can be considered a form of alternative currency. Barters are another type of alternative currency.

Detailed explanation-5: -fiat money, in a broad sense, all kinds of money that are made legal tender by a government decree or fiat. The term is, however, usually reserved for legal-tender paper money or coins that have face values far exceeding their commodity values and are not redeemable in gold or silver.