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  • A tangible good that generates utility (satisfaction) and is exchangeable. Tangible goods include coffee, wheat, computers, and gold. Commodities are traded in markets, which is generally referred to as a commodity exchange. A much broader definition of commodity includes all products that are traded in a commodity exchange. These products will include international currencies and bonds.

    The values of commodities are susceptible to changes because of price movements, perceived inflation, or changes in supply and demand. When commodities are in abundance, their prices tend to fall. Conversely, when they are scarce, their prices tend to rise. If the demand for commodities is greater than the available supply of commodities, the prices of commodities tend to rise in order to offset the increasing demand.

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