What is representative full bodied money?
(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.
What is full bodied money and representative full bodied money?
Definition of full-bodied money : money which has a face value not in excess of its intrinsic value as a commodity Commodity money may be either full bodied money or token money. — Money and Banking, 1985.
What are examples of representative money?
Representative money is a well-known form of money. It is money (normally paper money) that can be exchanged for the commodity behind it. Modern examples of representative money are credit cards and checks, and traditional examples include gold, tobacco, and copper.
What is representative paper money?
Representative money is any medium of exchange, often printed on paper, that represents something of value, but has little or no value of its own. Unlike some forms of fiat money, genuine representative money must have something of intrinsic value supporting the face value.
What is the difference between fiat money and full bodied money?
Fiat money is physical money—both paper money and coins—while representative money is a form of currency that represents the intent to pay, such as a check. Both fiat and representative money are backed by something. Without any backing, they would be completely worthless.
What is the difference between full bodied money and Credit money?
Full bodied money refers to that money whose intrinsic value (value of the metal) is equal to the face value of the engraving on the currency, whereas, Credit money refers to that money whose claim is falling due in future. Nowadays, individuals frequently use credit money in the form cheques, drafts, credit cards etc.
What are the three category of money?
Money comes in three forms: commodity money, fiat money, and fiduciary money. Most modern monetary systems are based on fiat money.
What are the three types of money?
Economists differentiate among three different types of money: commodity money, fiat money, and bank money. Commodity money is a good whose value serves as the value of money. Gold coins are an example of commodity money.
What does fiat mean in Crypto?
Fiat is just mainstream legal tender, or official national currency, issued by governments. This includes the US Dollar, Canadian Dollar, Euro, Japanese Yen, etc. Fiat isn’t backed by any commodity (so when the USD used to be on the gold standard, it wasn’t fiat).
Why is the amount of representative money in use limited?
Limits. Representative money is limited by the supply of the commodity for which it can be redeemed. In other words, the government should only issue the amount of representative money that it has the ability to convert to the commodity the money is based upon.
What is narrow money supply?
Narrow money is a category of money supply that includes all physical money such as coins and currency, demand deposits, and other liquid assets held by the central bank. In the United States, narrow money is classified as M1 (M0 + demand accounts).