Explain the various classification of Money.
Money can be classified on the basis of relationship
between the value of money as money and the value of money as a commodity.
Broadly, money can be
classified as:
(i) Full Bodied money - Any
unit of money, whose face value and intrinsic value are equal, is known as full
bodied money, i.e. Money Value = Commodity Value. For example, during the
British period, one rupee coin was made of silver and its value as money was
same as its value as a commodity.
(ii) Representative Full bodied money - It refers to money which is usually made of paper. The
value of representative full-bodied money is much higher than its value as a
commodity. It is accepted as money as it can be conveniently used for carrying
out transactions.
(iii) Credit money - Credit
money refers to the money whose intrinsic value (as a commodity) is much lower
than its face value, i.e. Money Value > Commodity Value. For example, face
value of Rs 100 note is Rs 100, but we would get a much lower value if we sell
the note as a piece of paper. Credit cards, bank deposits are other examples of
credit money.
Money can be classified on the basis of relationship between the value of money as money and the value of money as a commodity.
Broadly, money can be classified as:
(i) Full Bodied money - Any unit of money, whose face value and intrinsic value are equal, is known as full bodied money, i.e. Money Value = Commodity Value. For example, during the British period, one rupee coin was made of silver and its value as money was same as its value as a commodity.
(ii) Representative Full bodied money - It refers to money which is usually made of paper. The value of representative full-bodied money is much higher than its value as a commodity. It is accepted as money as it can be conveniently used for carrying out transactions.
(iii) Credit money - Credit money refers to the money whose intrinsic value (as a commodity) is much lower than its face value, i.e. Money Value > Commodity Value. For example, face value of Rs 100 note is Rs 100, but we would get a much lower value if we sell the note as a piece of paper. Credit cards, bank deposits are other examples of credit money.
