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Questions and Answers
Which type of money is currently used in most countries, according to the text?
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?
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?
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?
Which type of currency was historically backed by a specific amount of gold and could be redeemed for that gold?
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What is a key characteristic of fiat money compared to gold-backed currencies?
What is a key characteristic of fiat money compared to gold-backed currencies?
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