Question

Fiat money: a is currency backed by the gold in Fort Knox. b is currency from Italy. c has advantages over commodity-backed money. d includes currency, checking deposits and credit cards. e can include currency backed by gold, but not silver.

Answer 1

Answer:

Option D.

Explanation:

Fiat money refers to currency that is issued by the government and which is not backed by any physical commodity, such as gold or silver, but rather by the government that issued it.

The value of fiat money is gotten from the relationship that exists between supply and demand and the stability of the issuing government. The value is not based on the worth of a commodity backing it as is the case for commodity money.

Most modern paper currencies are fiat currencies, including the U.S. dollar, the euro, and other major global currencies. One risk that fiat money faces is the printing of too many of a particular currency, which can contribute to hyperinflation.

Answer 2

Answer:

D.includes currency, checking deposits and credit cards.

Explanation:

Fiat money can be defined as any currency declared as legal tender by the government that lacks intrinsic value.

Fiat money is a government-issued currency that is not backed by a physical commodity, such as gold or silver, but rather by the government that issued it. It is not a currency from Italy.

Fiat money gives central banks of a country a greater control over the economy because they can control how much money is printed and the value is defined by the relationship between demand and supply.