What gives commodity money its value? a government’s guarantee of its value the type of material with which it is made its rate of exchange in other countries the ability to trade it for a valuable good

the type of material with which it is made

The type of material with which it is made is the correct answer.

The type of material with which it is made gives commodity money its value.

Further Explanation:

Commodity money:

Commodity money is money that can be defined by the value of any commodity. It is the oldest form of money. Commodity money is treated as a means of exchange for purchasing and selling of products. Commodity money has its intrinsic value, which means if the commodity has no value, but it can be used as a means of exchange.

Some of the examples of commodity money are gold, silver, copper, and many more were used as a means of the exchange earlier.

Commodity money was used in ancient times when there was no paper or plastic money. People used to purchase commodities in exchange for other commodities like, for example, apples were exchanged by copper commodity money. This was done earlier, and this practice was followed.

Thus, the commodity money has its value like fiat, which has no value, but it is being recognized by the government authority so, it has its value.

Justification for the correct and incorrect

a government’s guarantee of its value: This is an incorrect answer.

Commodity money has its value, it is not a governments’ guarantee of its value.

the type of material with which it is made: This is a correct answer.

Commodity money has the value of the type of material with which it is made. This is an appropriate meaning of the commodity money.

its rate of exchange in other countries: This is an incorrect answer.

Commodity money has its own value, it is not the rate of exchange in other countries.

the ability to trade it for a valuable good: This is an incorrect answer.

Commodity money has its value, not the ability to trade it for a valuable good. Commodity money is used as the exchange of commodities.

Learn More:

1. Credit card  

2. Motivation effect from money  

3. Exchange  

Answer Details:

Grade: High School

Chapter: Commodity money

Subject: Economics

Keywords:

What gives commodity money its value, a government’s guarantee of its value, the type of material with which it is made, its rate of exchange in other countries, the ability to trade it for a valuable good.

i mean they dont have to