ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Early forms of money were often commodity money-money that had value because it was made of a substance that had value. Examples of commodity money are gold and silver coins.

Detailed explanation-2: -What Is Representative Money? 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-3: -Fiat money can look similar to representative money (such as paper bills), but the former has no backing, while the latter represents a claim on a commodity (which can be redeemed to a greater or lesser extent). Government-issued fiat money banknotes were used first during the 11th century in China.

Detailed explanation-4: -The 4 different types of money as classified by the economists are commercial money, fiduciary money, fiat money, commodity money. Money whose value comes from a commodity of which it is made is known as commodity money.

Detailed explanation-5: -Money helps to facilitate trade. Money is a medium exchange because buyers and sellers agree to its common value.