Fiat Money Definition

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Questions and Answers

Which type of money is currently used in most countries, according to the text?

  • Digital currencies
  • Fiat money (correct)
  • Representative money
  • Gold certificates

What distinguishes fiat money from representative money?

  • Representative money is controlled by the central bank.
  • Fiat money is backed by a physical commodity like gold.
  • Representative money is redeemable for its value in gold.
  • Fiat money has no intrinsic value and is not tied to a physical commodity. (correct)

In the context of money supply, what role does the central bank typically play in a fiat money system?

  • Promoting the use of barter as an alternative to fiat money
  • Backing all paper currency with gold reserves
  • Issuing gold certificates
  • Controlling the supply and circulation of fiat money (correct)

Which type of currency was historically backed by a specific amount of gold and could be redeemed for that gold?

<p>Gold certificates (A)</p> Signup and view all the answers

What is a key characteristic of fiat money compared to gold-backed currencies?

<p>Fiat money is not redeemable for a fixed amount of gold. (C)</p> Signup and view all the answers

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