Where do the different types of money derive their value? [For WSC please answer correctly]
Answers
Answer :- Economist Frederic Mishkin defines money as “anything that is generally accepted as payment for goods or services or in the repayment of debts.” Money serves as a medium of exchanged (pays for goods and services), a unit of account (used to measure value in an economy) and a store of value (repository of purchasing power available over time). Money can take the form of commodity money (precious metals, i.e. gold) or can derive value by governmental decree as legal tender (fiat money).
Answer:
The four most relevant types of money are commodity money, fiat money, fiduciary money, and commercial bank money. Commodity money relies on intrinsically valuable commodities that act as a medium of exchange. Fiat money, on the other hand, gets its value from a government order.
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