Commodity money and Metallic money. Distinguish between HSC 12th Standard Economics.

Commodity money and Metallic money.

1.       Commodity Money

In the initial stages of human development different commodities were used as money. e.g. cattle, feathers, tusks, animal skin, salt, shells etc. The commodity chosen to serve as money (by common consent) depended upon various factors like climatic conditions, location, culture, economic development etc., e.g. people in the cold continents used skins and furs of animals as money. Whereas people living by the seashore used shells as a medium of exchange.

This commodity money had certain limitations, like, the perishable nature of commodity, the indivisibility of certain goods, problem of storage, etc.
These problems of commodity money gave rise to introduction of Metallic money.

2.       Metallic Money

Introduction of metallic coins made of silver, gold, copper, iron etc., is considered as an important stage in the evolution of modern monetary system. Various defects of commodity money like perishability, heterogeneity, indivisibility gave rise to introduction of metallic money. Some characteristics of metals like continuity of supply, high and stable price, scope for division etc., made these metals serve as an excellent medium of exchange.

Metallic coins can be divided into two categories.
a)       Standard or full-bodied coins

b)       Token coins.

1 comment:

  1. Sir normally we write distinguish by dividing points in two or three points with side heading but if I write points like this so i scored how much marks in distinguish