Tuesday 811
Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed. PART 10 Money and Prices in the Long Run Chapter 29 of 36 The Monetary System Section 5 of 22 … Commodity money is money with intrinsic value. Intrinsic value means the item has value besides as money. Gold is an example of commodity money. Gold has intrinsic value because it is used in industry and making jewelry. Today we no longer use gold as money. In the past gold was a common form of money because it is easy to carry, measure, and verify purity. When an economy uses gold as money or uses paper money that is convertible into gold on demand the economy is said to be operating on a gold standard. … Cigarettes is another example of commodity money. In prisoner-of-war camps during World War II prisoners traded goods and services using cigarettes as money. Even nonsmokers accepted cigarettes as money, knowing they could use cigarettes to buy goods. … Fiat money is money without intrinsic value. Fiat money is...