Multiple choice

Which of the following is the definition of fiat money?

  1. The money that would have value even if it were not being used as money.

  2. The money that has no intrinsic value.

  3. The money that can be exchanged on demand for a specific commodity.

  4. The currency that is held in significant quantities by governments and institutions as a part of their foreign exchange reserves.

  5. None of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Yes, it's the correct answer. Fiat money is the money that has no intrinsic value but that has value as money because the government decreed that it has value for that purpose.

Keep practicing — related questions