Responses
Neither type of money can be used for any purpose other than as a medium of exchange.
Neither type of money can be used for any purpose other than as a medium of exchange.
Commodity money has value in itself while fiat money has value only because it is given value.
Commodity money has value in itself while fiat money has value only because it is given value.
Fiat money only has value if commodity money is a precious metal such as gold.
Fiat money only has value if commodity money is a precious metal such as gold.
Both commodity money and fiat money require a free-market system.
1 answer
The statement that accurately describes the relationship between commodity money and fiat money is:
Commodity money has value in itself while fiat money has value only because it is given value.
Commodity money is backed by a physical commodity, such as gold or silver, which has intrinsic value. In contrast, fiat money has no intrinsic value and is not backed by a physical commodity; its value comes from the trust and confidence that the government and society place in it.
