Questions and Answers
Which type of money is accepted as a medium of exchange due to the trust that exists between the payer and the payee?
Fiduciary Money
Which type of money is a government-issued currency that is not backed by a commodity such as gold?
Fiat Money
Which type of money is described as claims against financial institutions that can be used to purchase goods or services?
Commercial Bank Money
Which type of money is equal to a commodity used for exchange?
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Which type of money gives central banks greater control over the economy because they can control how much money is printed?
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Study Notes
Types of Money
- Fiat money is accepted as a medium of exchange due to the trust that exists between the payer and the payee.
- Fiat money is a government-issued currency that is not backed by a commodity such as gold.
- Commercial bank money is described as claims against financial institutions that can be used to purchase goods or services.
- Commodity-based money is equal to a commodity used for exchange.
- Fiat money gives central banks greater control over the economy because they can control how much money is printed.
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