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Why does commodity money have value?

Why does commodity money have value?

Commodity money obtains value as it is based on a good that has a value outside its use as a currency. This is known as ‘intrinsic value’.

What most accurately explains why commodity money has value?

Commodity money only has value because it functions as an efficient medium of exchange. Commodity money is a good that can be used as a medium of exchange or for some other purpose.

Which of the following statements accurately describes the relationship between commodity money and fiat money?

Which statement accurately describes the relationship between commodity money and fiat money? Commodity money has value in itself while fiat money has value only because it is given value.

What determines the value of money?

The value of money is determined by the demand for it, just like the value of goods and services. When the demand for Treasurys is high, the value of the U.S. dollar rises. The third way is through foreign exchange reserves. That is the amount of dollars held by foreign governments.

Which of the following provides the best explanation of why money is valuable?

Which of the following provides the best explanation of why money is valuable? A Money is valuable because it is declared legal tender by the government issuing it.

Which of the following most accurately describes why fiat money has value?

Which of the following most accurately explains why fiat money has value? Fiat money has value because the government declares that it has value.

Which of the following most accurately explains why fiat money has no value in itself?

Fiat money has value because it enables the barter system to work. Which most accurately explains why fiat money has no value in itself? Fiat money is not a durable commodity. Fiat money has only a single use as a medium of exchange.

Does money actually have value?

Money is a medium of exchange; it allows people to obtain what they need to live. Like gold and other precious metals, money has worth because for most people it represents something valuable.

What is the significant effect on the value of money?

Inflation. Inflation reduces the value of money. When prices go up because wages are high and materials are scarce, it takes more money to buy goods. Money is then worth less relative to the goods and services that you can purchase with it.