ECONOMICS
MONEY
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
Frankincense
|
|
|
Gold
|
|
|
Silver
|
|
|
Trust that it is worth something
|
Detailed explanation-1: -Why Is Fiat Money Valuable? In contrast to commodity-based money like gold coins or paper bills redeemable for precious metals, fiat money is backed entirely by the full faith and trust in the government that issued it.
Detailed explanation-2: -Government backs the money supply. In the United States, the money supply is backed up by the government, which guarantees to keep the value of the money supply relatively stable.
Detailed explanation-3: -The value of the U.S. dollar is measured in three ways: exchange rates, Treasury notes, and foreign exchange reserves. While the most common method is through exchange rates, the truth is you need to be familiar with all three in order to make educated guesses about where the dollar might be headed next.
Detailed explanation-4: -Like any other fiat currency, the dollar’s relative value depends on the economic activity and outlook of the United States. In addition to fundamentals and technical factors, market psychology and geopolitical risk also influence the dollar’s value on the world market.
Detailed explanation-5: -Fiat money refers to money whose value has been decreed by the government.