ECONOMICS
MONETARY POLICY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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money is checking accounts.
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money that has intrinsic value on its own.
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specially created from the Federal Reserve.
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money that is only valuable because the government says it is.
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Detailed explanation-1: -fiat money, in a broad sense, all kinds of money that are made legal tender by a government decree or fiat. The term is, however, usually reserved for legal-tender paper money or coins that have face values far exceeding their commodity values and are not redeemable in gold or silver.
Detailed explanation-2: -Key Takeaways. 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-3: -Even the Indian currency INR is also a fiat money. These fiat currencies are quite easy to issue, as the government or the central bank has not to issue any backup commodity for it. But at the same time, fiat money is quite risky as it can lead to high inflation of the economy.
Detailed explanation-4: -Examples of fiat money include coins and bills ( paper currency). Fiat money gets its value from a government order (i.e. fiat). That means, the government declares fiat money to be legal tender, which requires all people and firms within the country to accept it as a means of payment.