ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -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-2: -Price is the quantity of payment or compensation given to the opponent in return for goods or services. In modern economies, prices are generally expressed in units of some form of currency as exchange values.

Detailed explanation-3: -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-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: -Commodities that have been used as medium of exchange include gold, silver, copper, salt tea, large stones shells, alcohol, cigarettes, silk, cocoa beans, cowries and barley etc.