Question

What are the different types of money?

Answer 1

There are three types of money recognized by economists - commodity money, representative money, and finally, fiat money.

Answer 2

The different types of money are as follows:

1. Commercial Bank Money- also referred to as demand deposits. Money can be withdrawn from the account for purchasing goods and services as and when required.

2. Commodity Money: Earlier in case of the barter system, commodities were exchanged and hence was considered to be equivalent to money.

3. Fiduciary money: Examples include banknotes and cheques which are used as money.

4. Fiat money: No inherent value of its own but its value can be determined by the order of the government and thereby becomes a legal form of transaction. Example: Coins, Paper money.