Types of
Money by is Intrinsic Value
Based on the relative value of its
purchasing power, pr its nominal value, if compared with tis material value,
money can be categorized as full-bodied money and token money.
Full-bodied money has a material value
(intrinsic value) equal its nominal value (purchasing power). In other words,
this kind of money has a full value as set by the gold standard. In the gold
standard, the value of such money is equivalent to the value of metal contained
within the money. For example, if the money is made of gold weighing 5 gram,
then its purchasing power (nominal value) is the same as the prince of 5 gram
of gold.
Token money has an intrinsic value
which is much less, or even negligible, compared to its nominal value.
Generally, token money is paper money. A bank note of Rp. 10,000 (ten thousand
rupiah) that you have in your pocket perhaps has its material (paper) value of just Rp200 (two hundred
rupiah).
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