ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A fiat money is a type of currency that is declared legal tender by a government but has no intrinsic or fixed value and is not backed by any tangible asset, such as gold or silver.

Detailed explanation-2: -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: -In monetary economics, fiat money is an intrinsically valueless object or record that is accepted widely as a means of payment. Accordingly, the value of fiat money is greater than the value of its metal or paper content. One justification for fiat money comes from a micro-founded model.

Detailed explanation-4: -Fiat money has value only because of the government as it manages that value or because any two parties in a transaction can agree on its value. Governments used to mint coins out of a worthy physical commodity, such as gold or silver, or print paper money that could be obtained for a set amount of a physical entity.