Question

Distinguish between Full-bodied Money and Token Coins.

Answer 1

1. Commodity money is that money whose face value is equal to its commodity value whereas token coins are such coins whose face value is greater than is commodity value.

2. Commodity money were used in barter system where one commodity was taken as a medium of exchange whereas token coins are used in the modern era.

3. For example- In commodity money, rice as a commodity was taken as a medium of exchange where the face value of the medium was equal to its commodity value whereas in taken coins the ten rupee coin in India has a very low commodity value as compared to its face value which is Rs.10.