ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The correct answer is Fiduciary Money. Fiduciary money is money that is accepted as a medium of exchange due to the trust that exists between the payer and the payee. Cheques are fiduciary money as these are accepted as a means of payment on the basis of trust but not on the basis of any order of the government.

Detailed explanation-2: -Fiduciary cash, currency or money, alludes to banknotes and coins available for use in the economy. This is the liquidity accessible to financial actors to do exchanges. It is a method for payment.

Detailed explanation-3: -Credit money is the creation of monetary value through the establishment of future claims, obligations, or debts. These claims or debts can be transferred to other parties in exchange for the value embodied in these claims. Fractional reserve banking is a common way that credit money is introduced in modern economies.

Detailed explanation-4: -Fiat money refers to money whose value has been decreed by the government.

Detailed explanation-5: -1. Modern currency is accepted as a medium of exchange because it is authorized by the central government of a country. 2. In India, RBI issues the currency notes and it is illegal for any other organization or individual to issue the currency.