Question

What gives commodity money its value

Answer 1

The type of material with which it is made gives the commodity money its value.

Further Explanation:

Commodity money:

Commodity money is money that can be defined by the value of any commodity. It is the oldest form of money. Commodity money is treated as a means of exchange for purchasing and selling of products. Commodity money has its intrinsic value, which means if the commodity has no value, but it can be used as a means of exchange.

Some of the examples of commodity money are gold, silver, copper, and many more were used as a means of the exchange earlier.

Commodity money was used in ancient times when there was no paper or plastic money. People used to purchase commodities in exchange for other commodities like,for example, apples were exchanged by copper commodity money. This was done earlier, and this practice was followed.

Thus, the commodity money has its value like fiat, which has no value, but it is being recognized by the government authority so, it has its value.

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Answer Details:

Grade: High School

Chapter: Commodity money

Subject: Economics

Keywords:

What gives commodity money its value, the type of material with which it is made.

Answer 2

The answer can include the following points:

Scarcity is one of the major factors that give money its value. Because if it was very common and everyone could find it easily, it will lose its value. Hence the primary factor is scarcity.

Apart from this, money gets its value from being durable, if for example, fruits were considered a medium of exchange, they would perish easy and would lose its value