When countries replaced gold and silver coins with paper money exchangeable for certain amounts of precious metals, the monetary system evolved from using _____ money to using _____ money.

Question

Quizplus · Accepted Answer

Commodity money is money whose value comes from a commodity of which it is made, such as gold and silver coins. Commodity-backed money is money that is exchangeable for a commodity at a fixed rate, such as paper money that can be exchanged for a certain amount of gold or silver. The transition described is from using actual commodities as money to using paper money that represents a commodity, hence from commodity to commodity-backed money.

When Countries Replaced Gold and Silver Coins with Paper Money