ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -What is Fiat Money? Fiat money is a currency that lacks intrinsic value and is established as a legal tender by government regulation. Traditionally, currencies were backed by physical commodities such as silver and gold, but fiat money is based on the creditworthiness of the issuing government.

Detailed explanation-2: -Legal Tender: Legal tender refers to the money which can be legally used to make payments of debts or other obligations. Fiat money: Fiat money refers to the money which is backed with the order of the government under law. It must be accepted for all debts.

Detailed explanation-3: -Fiat money is currency that has the government backing and is declared by it to be legal tender. It is not backed by a physical commodity and thus doesn’t have any intrinsic value.

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.

Detailed explanation-5: -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.