How does token money differ from fiat money?
Understand the Problem
The question is asking for a comparison between token money and fiat money, specifically addressing their characteristics and differences. The options provided suggest various contrasts related to redemption, usage, historical significance, and material composition.
Answer
Token money has limited legal tender; fiat money is unlimited legal tender.
Token money is a limited legal tender with little intrinsic value, while fiat money is an unlimited legal tender controlled by governments.
Answer for screen readers
Token money is a limited legal tender with little intrinsic value, while fiat money is an unlimited legal tender controlled by governments.
More Information
Fiat money and token money both have little intrinsic value but play different roles in the economy, with fiat money being a more universal and government-backed form of currency.
Tips
Mistaking token money for cryptocurrencies can happen due to similar terms. Ensure that token money is recognized as a traditional currency form with physical representations.
Sources
- What is the difference between fiat money and token money? - answers.com
- Token Money - Economics Help - economicshelp.org
- Token money - Wikipedia - en.wikipedia.org
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