How well do you know about the types of money?

Cryptocurrency is considered a digital asset because it exists solely in digital form and relies on encryption techniques to secure transactions. Unlike fiat money, which is physical currency issued by a government, cryptocurrency is decentralized and operates on a technology called blockchain. Cheques and commodities, on the other hand, are not digital assets as they are physical instruments or tangible goods.

The correct answer is "Token money". Token money refers to a type of currency where the value of the money is less than the commodity it represents. In other words, the intrinsic value of the money is lower than its face value. This means that the value of the money is derived from the trust and confidence placed in it by the people who use it, rather than the actual value of the material it is made from.

Fiat money refers to currency that is issued by a government and is not backed by a physical commodity, such as gold or silver. Instead, its value is derived from the trust and confidence that people have in the government that issues it. This legal backing gives fiat money its value and makes it widely accepted as a medium of exchange. Credit refers to the borrowing or lending of money, while currency is a broader term that encompasses both fiat money and other forms of money, such as digital currencies. Therefore, the correct answer is Fiat money.

A commodity is considered durable because it is capable of lasting for a long period of time without deteriorating. It is divisible because it can be divided into smaller units without losing its value or functionality. It is easily exchangeable because it can be readily bought and sold in the market. Therefore, the correct answer is "All of the above" as all three characteristics apply to a commodity.

Fiduciary money refers to the money that is accepted based on the trust between the payer and the payee. This trust is established because the money is backed by the faith and credit of the government or central bank. It is not backed by any physical commodity, such as gold or silver, but rather by the confidence and belief in the stability and value of the currency. Therefore, fiduciary money is the correct answer in this case.

Limited supply has an impact on the value of money because when the supply of money is limited, it becomes more valuable. This is because there is less money available to be used for transactions, making each unit of money more scarce and therefore more valuable. When the supply of money is unlimited or abundant, its value decreases as there is more money available, leading to inflation and a decrease in purchasing power.

When Fiat money is backed by Gold or Silver, it is generally called representative money. This means that the paper currency represents a certain value of gold or silver, which can be exchanged for the precious metal upon demand. This system provides a sense of stability and trust in the currency, as it is backed by a tangible asset. Representative money allows for easier transactions and trade, as it eliminates the need to physically carry around gold or silver for every transaction.

Fiat money has a face value because it is issued and regulated by the government as legal tender. The face value of fiat money represents the nominal value assigned to it, which is typically printed on the currency itself. Unlike soft money, which refers to non-physical forms of currency such as checks or electronic transfers, fiat money is physical currency that can be used for transactions. Hard money, on the other hand, refers to currency backed by a physical commodity like gold or silver, and its value is determined by the market price of that commodity.

Fiduciary money refers to currency that is not backed by a physical commodity, such as gold or silver, but rather by the trust and confidence of the people using it. It is generally paid in forms such as gold, silver, or paper money, which are widely accepted as a medium of exchange. This excludes commodities like cheques, which are not considered fiduciary money. Therefore, the correct answer is gold, silver, or paper money.

A commodity is best described as an item with inherent value in and of itself. This means that a commodity has value independent of any other factors, such as its use or its exchange rate. It is not necessarily related to money or cash, and it is not specifically referring to money in the form of cheques.