Different Kinds of money
In prisoner - of - war camps, cigarettes served as money. In the nineteenth cenlury money was mainly gold and silver coins. These are examplcs of commodily money, ordinary goods with industrial uses (gold) and consumption uses (Cigarettes) which also serve as a medium of exchange. To use commodity money, society must either cut back no other uses of that commodity or devote scarce resource to producing additional quantities of the commodity. But there are less expensive ways for society to produce money.
A token money is a means of payment whose value or purchasing power as money greatly exceeds it cost of production or value in uses other than as money.
A$10 note is worth far more as money thanas a 3 * 6 inch piece of high-quantity paper. Similarly, monetary value of most coins exceeds the amount you get by melting them down and selling off the metals they contain. By ective agreeing to use token money, society econmizes on the scarce resources required to produce money as a medium of exchange. Since the manufacrsts aree tiny, why don't everyone make $10 notes?
Different Kinds of moneyIn prisoner - of - war camps, cigarettes served as money. In the nineteenth cenlury money was mainly gold and silver coins. These are examplcs of commodily money, ordinary goods with industrial uses (gold) and consumption uses (Cigarettes) which also serve as a medium of exchange. To use commodity money, society must either cut back no other uses of that commodity or devote scarce resource to producing additional quantities of the commodity. But there are less expensive ways for society to produce money. A token money is a means of payment whose value or purchasing power as money greatly exceeds it cost of production or value in uses other than as money.A$10 note is worth far more as money thanas a 3 * 6 inch piece of high-quantity paper. Similarly, monetary value of most coins exceeds the amount you get by melting them down and selling off the metals they contain. By ective agreeing to use token money, society econmizes on the scarce resources required to produce money as a medium of exchange. Since the manufacrsts aree tiny, why don't everyone make $10 notes?
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