ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -What is Fiat Money? Fiat money is a currency that lacks intrinsic value and is established as a legal tender by government regulation. Traditionally, currencies were backed by physical commodities such as silver and gold, but fiat money is based on the creditworthiness of the issuing government.

Detailed explanation-2: -While fiat money doesn’t have intrinsic value-through an objective calculation-its value is set by the government that issues the currency.

Detailed explanation-3: -Fiat money is a government-issued currency that is not backed by a commodity such as gold. Fiat money gives central banks greater control over the economy because they can control how much money is printed. Most modern paper currencies, such as the U.S. dollar, are fiat currencies.

Detailed explanation-4: -Legal tender refers to any currency that is declared as legal by the government while fiat money is referred to as money that is not backed up by any physical commodities such as gold. They are backed by the government.

Detailed explanation-5: -The acronym F.I.A.T. stands for Fabbrica Italiana Automobili Torino, but the name FIAT means so much more. Founded in 1899, over the years the Turin-based company has become a symbol of Italy’s technological and creative enterprise, which have changed the country and the history of global mobility forever.