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: -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-3: -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-4: -Some examples of commodity money are: Gold. Copper.

Detailed explanation-5: -On the criteria above, gold meets all the requirements needed that we can say yes, gold is a commodity. Like silver and other precious metals, it is a basic metal element. As such it is described as being fungible – identical, and totally interchangeable.