Intermediate Macroeconomics: Money

In principle, anything can serve these functions, and hence anything can serve as money. In fact, in the past, many different things have served as money. For many years commodities have served as money – thinks like cows, cigarettes, and precious metals (e.g. gold and silver). In more recent years, economies have moved towards fiat money. Fiat money are pieces of paper (or electronic entries) that have no intrinsic value – they just have value because a government declares that they do and market participants accept them in exchange. You can see why certain kinds of commodities can be problematic as money. First, commodities have value independent of their role as money. Fluctuating commodity values (say there is a drought