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The Business Cycle

Question 4 • * HSA 26-27 Economics

Alice wants to cash in a silver certificate that was purchased by her grandmother many years ago. The certificate is considered .

Answer
A
fiat money
B
representative money
C
commodity money

Explanation

A silver certificate represents a claim to a specific amount of silver, rather than being valuable mainly for its own material. Money backed by or redeemable for a commodity is representative money. Therefore, the certificate is representative money, not fiat money, which has value by government decree, or commodity money, which is itself the valuable commodity.

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