Banking · Video Lesson
Types of Money: Commodity, Representative, Fiat & Bank Money
Money has taken many forms through history. This lesson explains the four main types — commodity money, representative money, fiat money, and bank money — and introduces intrinsic value, the idea that helps explain why a gold coin and a paper dollar are fundamentally different kinds of money.
For Teachers
Lesson at a glance
- Topic
- Banking & Economics
- Grade Level
- Grades 7–12
- Resource Type
- Video Lesson + Worksheet
- Estimated Time
- 45–60 minutes
- Format
- Class discussion + activity
- Materials
- Video, worksheet, whiteboard
What Students Learn
Learning objectives
- Define money and the idea of intrinsic value
- Describe commodity money and give an example such as gold or silver
- Explain representative money and how it was backed by a commodity
- Explain fiat money and why modern currencies have value
- Describe bank money such as checkable deposits and debit-card balances
Video Lesson
Watch: Types of Money: Commodity, Representative, Fiat & Bank Money
Materials
What you’ll need
- Internet access for the video
- Printed copies of the worksheet (one per student)
- Whiteboard or projector for the sorting activity
- Optional: examples or images of coins, bills, and a check
Key Terms
Vocabulary
- Intrinsic value
- Worth an item has in itself, apart from its use as money (gold is valuable even if not used as currency).
- Commodity money
- Money that is a valuable good in itself, such as gold or silver coins.
- Representative money
- A token or certificate that can be exchanged for an underlying commodity it represents.
- Fiat money
- Money that has value because a government declares it legal tender and people accept it, not because of intrinsic worth.
- Bank money
- Book credit such as checkable deposits and debit balances used to make payments.
- Legal tender
- Money that must be accepted as payment for debts, public and private.
- Inflation
- A rise in prices that can occur if too much money is created too quickly.
For Teachers
Lesson plan
Estimated time: one 45–60 minute class period.
Lesson sequence
- Introduction (6 min). Ask: is a gold coin the same kind of money as a paper dollar? Introduce intrinsic value as the idea that separates them.
- Watch the video (8 min). Play the lesson video. Ask students to note the four types of money.
- The four types (20 min). Work through each: commodity money (gold/silver, with intrinsic value), representative money (a certificate backed by gold), fiat money (today’s currency, valuable because it is accepted and declared legal tender), and bank money (checks, debit balances). Discuss why printing fiat money too fast causes inflation.
- Worksheet (8 min). Students complete the worksheet based on the video.
- Wrap-up (4 min). Ask which types students have actually used and which are historical.
Extension activity
- Sort it. Give examples (a gold coin, a gold certificate, a $20 bill, a debit-card payment) and have students label the type of money and whether it has intrinsic value.
Assessment
Assess participation, the sorting activity, and the completed worksheet.
Discussion
Discussion questions
- What is intrinsic value, and which types of money have it?
- How is representative money different from the commodity it represents?
- Why does fiat money have value even though the paper itself is nearly worthless?
- How is bank money (a debit payment or check) different from cash?
- What can happen if a government prints too much fiat money?
Printable Worksheet
Types of Money — Student Worksheet
Short-answer worksheet based on the video for students to complete and discuss.
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