In what ways are representative money and fiat money similar in what ways are they different quizlet?

the difference is fiat money is physical money (paper money and coins) backed up by the government, representatives money is something that represents intent to pay the money such as a check,backed up by many different things, and the commodity money is based on material it was manufactured with such as gold or silver.

What is representative money in economics?

Representative money is a certificate or token that can be exchanged for the underlying commodity. For example, instead of carrying the gold commodity money with you, the gold might have been kept in a bank vault and you might carry a paper certificate that represents-or was “backed”-by the gold in the vault.

What is fiat money example?

Well-known examples of fiat currencies include the pound sterling, the euro and the US dollar. In fact, very few world currencies are true commodity currencies and most are, in one way or another, a form of fiat money.

Is fiat money same as fiduciary money?

False as fiat money is the money backed by the order ( fiat ) of the government but fiduciary money is the money backed by mutual trust between the payer and the payee.

What is the difference between commodity money and fiat money quizlet?

What is the difference between commodity money and fiat money? Commodity money involves the use of an actual good in place of money (gold coin, tobacco). Fiat money has no other value than as a medium for exchange; value comes from government (paper money).

Which of the following is an example of representative money?

Representative money is an item such as a token or piece of paper that has no intrinsic value but can be exchanged on demand for a commodity that does have intrinsic value, such as gold, silver, copper, and even tobacco. An item has intrinsic value if it still has value even if it is not used as money.

Why is fiat money called fiat?

A fiat currency is a national currency that is not pegged to the price of a commodity such as gold or silver. The value of fiat money is largely based on the public’s faith in the currency’s issuer, which is normally that country’s government or central bank.

What is another name for representative money?

The term representative money has been used variously to mean: A claim on a commodity, for example gold certificates or silver certificates. In this sense it may be called “commodity-backed money”.

Is Bitcoin a fiat?

Fiat money has attributed value because a government declares it legal tender – it has no intrinsic value. Bitcoin has intrinsic value beyond the trust of its community. Bitcoin doesn’t lean on a system of debts, its value boils down to how effective it is as a medium of exchange.

Who invented fiat money?

China
Fiat money originated from China in the 10th century, mainly in the Yuan, Tang, Song, and Ming dynasties. In the Tang Dynasty (618-907), there was a high demand for metallic currency that exceeded the supply of precious metals.

What does fiat mean in Crypto?

Fiat is just mainstream legal tender, or official national currency, issued by governments. This includes the US Dollar, Canadian Dollar, Euro, Japanese Yen, etc. Fiat isn’t backed by any commodity (so when the USD used to be on the gold standard, it wasn’t fiat).

What is the difference between money and fiat money?

Fiat money is physical money (paper money and coins), while representative money is something that represents intent to pay the money such as a check. Fiat money is backed by the government, and representative money can be backed by different things. For example, a personal check is backed by the money in a bank account.

Why does fiat money differ from commodity money?

Commodity money is a sort of money that is considered as a present good. Whereas, fiat money is a future obligation as it is simply a promise to pay in the future. Payment is never made when it comes to fiat money, instead it is only discharged. But commodity money, on the other hand, completes the transaction.

What are the disadvantages of fiat money?

Here are three major disadvantages to using a fiat currency. The unlimited ability of governments to “print” up money whenever they want. Fiat currencies will always lose value over time. Fiat money always has the potential to drop to zero value.

What is the definition of representative money?

Representative money is any medium of exchange that represents something of value, but has little or no value of its own (intrinsic value).