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New Forms of Money

When the mone...

Question

When the money value of money exceeds the commodity value of money, it is called:

A

full bodied money

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B

credit money

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C

fiat money

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D

fiduciary money

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Solution

The correct option is B
credit money

Credit money has a face value which is much higher than the commodity value. Credit money consists of credit cards, demand deposits, among others.

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Full-bodied money is that money whose money value and commodity value are:

Money becomes a commodity when intrinsic value of money exceeds its face value. Defend or refute the statement.

Distinguish between money value of money and commodity value of money.

Q. Give reasons or explain.
1) Money works as a store of value.
2) Any commodity cannot act as money.
3) Barter System had many difficulties.
4) Money is the basis of credit.

Q. Fill in the blanks with appropriate alternatives given in the brackets.
1) Medium of exchange is __________ function of money. (primary/secondary/contingent/ additional)
2) In the case of __________ coins, intrinsic value is less than their face value. (token/full bodied/representative/standard)
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4) Introduction of __________ removed difficulties of barter. (metals/bank/money/shares)
5) In the initial stage of development, __________ was used. (credit money /paper notes/ metallic coins/commodity money)

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