Commodity Money: Primitive money which consisted of commodities like rice, wheat, cattle and so on.
Metallic Money: In course of time pieces of gold, silver, copper or bronze came to be used as money. Inthe beginning, the value of metallic money in exchange was equal to their intrinsic value (i.e, the value of their metallic content). Metallic money can be divided into two types, Full-bodied coins and token coins. The coins of which the valuein exchange was equal to their intrinsic value are full-bodied coins. Coins which do not contain metal worth their value in exchange are called token coins (or) token money. The value of exchange is greater than it's intrinsic value.
Currency: The word "Currency" is used to indicate the coins and paper notes (paper money) collectively.
Paper Money: Paper money refers to the bank notes and government notes which are used as money. The circulation of paper money began as a substitute for metallic money. It represented a certain quantity of gold (or) silver. Later on, paper notes acquired the charecteristics of token money, being generally acceptable without reference to their metallic equivalent.
Representative Money: Paper notes and token coins which are freely convertable at a fixed rate into fully-bodied coins or equivalent bullion (gold, silver etc.) are collectively known as 'representative money'.This type of money was adopted in India in 1927 when rupee notes and coins were freely convertable into gold.
Fiat Money: When notes and coins are not fully convertable into full bodied money or bullion, but are generally acceptable on the basis of government decree (order or fiat), they are known as fiat money.
Unlimited legal tender: Money which is decreed by government to be legal tender to an unlimited extent is known as unlimited legal tender. Creditors are bound to accept payment in such money to an unlimited extent. In India, the rupee notes and coins are unlimited legal tender.
Limited legal tender: When notes and coins are legal tender only to a limited extent, they are known as limited legal tender. In India, coins below one rupee are limited legal tender.
Optional Money: Notes and instruments such as bills of exchange, cheques, promisary notes are often accepted in discharge of debts and obligations although they are not legal tender. Their acceptance is based on the mutual consent of the parties involved.
Bank Money: Bank deposits which are withdrawable by cheques are included under Bank Money. Banks create deposits when they extend credit to individuals and business firms. These deposits are also included in the category of Bank Money.
Credit Money: The amount of Bank credit extended individuals and business houses are held by them inthe form of bank deposits. These deposits are withdrawable by cheque just like primary deposits made by depositors. This part of bank money is known as 'Credit Money'.
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