ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Gold, silver, cowrie shells, cigarettes, and even cocoa beans have been used as money. These items are examples of commodity money, which means they also have a value from use as something other than money.

Detailed explanation-2: -Commodity Money: Commodity money is that money whose face value is equal to its commodity value. In other words, face value of the money like coin was equal to its intrinsic (commodity) value. It is also known as full-bodied money.

Detailed explanation-3: -The correct option is D. credit money. Credit money has a face value which is much higher than the commodity value. Credit money consists of credit cards, demand deposits, among others.

Detailed explanation-4: -Commodity value of money refers to value of the commodity (like metal) that the money is made of. Thus, if coins are made of gold or silver (as was the practice in old days), commodity value of money refers to the market value of the gold or silver contained in the coin.

Detailed explanation-5: -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.