Answer :
In this case, the correct answer is D) Representative Money. Representative money is currency that represents something of value, typically a physical commodity like gold or silver. The value of representative money is based on the fact that it can be exchanged for a specific amount of the underlying commodity upon demand.
For example, in the past, some currencies were backed by gold reserves held by the issuing government. This meant that the paper money or coins in circulation could be exchanged for a specific amount of gold upon request. This system provided stability to the currency because it was tied to a tangible asset with intrinsic value.
On the other hand, fiat money (option B) is currency that does not have intrinsic value and is not backed by a physical commodity. Its value is derived from the trust and confidence people have in the issuing government. Legal tender (option C) refers to the currency that must be accepted for payment of debts in a particular country.
By understanding the concept of representative money and its relation to tangible assets like gold or silver, you can see how it differs from fiat money and legal tender, which do not have the same direct link to physical commodities.
For example, in the past, some currencies were backed by gold reserves held by the issuing government. This meant that the paper money or coins in circulation could be exchanged for a specific amount of gold upon request. This system provided stability to the currency because it was tied to a tangible asset with intrinsic value.
On the other hand, fiat money (option B) is currency that does not have intrinsic value and is not backed by a physical commodity. Its value is derived from the trust and confidence people have in the issuing government. Legal tender (option C) refers to the currency that must be accepted for payment of debts in a particular country.
By understanding the concept of representative money and its relation to tangible assets like gold or silver, you can see how it differs from fiat money and legal tender, which do not have the same direct link to physical commodities.
