BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Fiat money is created and issued by the state
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Fiat money is inconvertible by law
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Its value as a commodity is as great as its value as money
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It is a legal tender
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Detailed explanation-1: -Characteristics of Fiat Currency To be considered fiat currency, the medium must be durable, portable, divisible, uniform, and controllable in supply.
Detailed explanation-2: -fiat monies. The value of fiat money is based largely on public faith in the issuer. Commodity money’s value, on the other hand, is based on the material it was manufactured with, such as gold or silver. Fiat money, therefore, does not have intrinsic value, while commodity money often does.
Detailed explanation-3: -Detailed Solution. Gold is not considered fiat money. Fiat money is the currency issued by the government which is not backed by any physical commodity such as silver or gold. Paper currency, coins, and demand drafts are fiat money.
Detailed explanation-4: -Fiat money is money that does not have intrinsic value and does not represent an asset in a vault somewhere. Its value comes from being declared “legal tender"-an acceptable form of payment-by the government of the issuing country.