ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -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. Fiat currencies provide more control to the central banks over the economy.

Detailed explanation-2: -Fiat money includes any national currency whose value is derived from a country’s promise to back it, not from physical commodities like gold or silver. Fiat money is backed by the general public’s faith in a country’s central bank and the national government issuing that money.

Detailed explanation-3: -Fiat money refers to money whose value has been decreed by the government.

Detailed explanation-4: -Fiat money is backed by a country’s government instead of a physical commodity or financial instrument. This means most coin and paper currencies that are used throughout the world are fiat money. This includes the U.S. dollar, the British pound, the Indian rupee, and the euro.