Unlike pennies and nickels, which cost more to produce than they are worth, paper money and quarters are:

Unlike pennies and nickels, which cost more to produce than they are worth, paper money and quarters are forms of money that don't have intrinsic value.

These forms are called as fiat money, a currency without intrinsic value that has been established as money, often by government regulation. Fiat money does not have use value, and has value only because a government maintains its value, or because parties engaging in exchange agree on its value.

Pennies and nickels on the other hand are forms of commodity money, a money whose value is underpinned by some physical good.

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