Question

3. The kinds of money Personal possession of currency is prohibited in U.S. prisons, although, in practice, prisoners still exchange goods and services. Until 2003, the year in which the U.S. government banned smoking in federal penitentiaries, cigarettes were the preferred medium of exchange among prisoners. One important difference between using cigarettes and using dollars as money is that have intrinsic value. Cigarettes are an example of money.

Answer 1

Answer: cigarettes are an example of commodity money.

Explanation:

Commodity money is a form of money whose worth comes from what it is made of. Commodity money are objects that have value or useful.

Commodity money is any commodity that has intrinsic value. An intrinsic value implies that the commodity has a worth even when used as money. During economic downturn such as hyperinflation, or severe economic depressions, people sometimes use commodity money rather than using the money legalised by their governments.

Examples of commodity money that have been used as money are gold, copper, silver, cigarettes, cowry, alcohol, shells etc.