Q.1What was the limitation of commodity money.
Q.2 why commodity money was not the exact solution of money.
Q.3Explain the modern currency system.
Answers
Answer:
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Explanation:
1. Commodity money is typically not as divisible as traditional paper money. For example, you can divide dollars into quarters, nickels, dimes and pennies; however, you may have a difficult time dividing a bar of gold into small denominations needed to make everyday purchases.
2.The main difference between commodity and fiat money is that commodity money has an intrinsic value. In other words, it has a use and value outside of its use as money. For example, gold can can be used in jewellery as well as a money. ... By contrast, fiat money only has value that is guaranteed by government
3.Modern Monetary Theory (MMT) is a heterodox macroeconomic framework that says monetarily sovereign countries like the U.S., U.K., Japan, and Canada, which spend, tax, and borrow in a fiat currency they fully control, are not operationally constrained by revenues when it comes to federal government spending.