1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
zhenek [66]
3 years ago
8

What determines the value of fiat currency?

History
2 answers:
MatroZZZ [7]3 years ago
5 0

The value of Fiat currency is a nation's credit, and that is because it is used to clear off debt by the citizens of a nation.

Fiat currency is, thus, a government issued-currency that is not supported by physical commodity, such physical commodity can be gold or silver.

The value of fiat money then is gotten from the relationship between supply and demand and the stability of government issuing it instead of the worth of a commodity that backs it.

For example, the United states dollar, euro and many world currencies are all fiat currency.  

Government, historically, mint coins from valuable physical commodity and print paper money that could be redeemed for a particular amount of physical commodity.

In the case of inflation or hyperinflation, fiat money tends to loose value and this is because it is not connected to physical reserves such as gold or silver. if people lose faith in the country's currency, it tends to lose its value.

This is entirely different from currency that is backed by gold mainly because the demands for products made of gold such as jewelries, computers, electronic devices and aerospace vehicles are very high.

Fiat currency is issued by most government as legal tender for the purpose of debt repayment

LEARN MORE:

  • fiat currency brainly.com/question/718436

KEYWORDS:

  • fiat money
  • gold or silver
  • currency
  • government
  • debt
  • physical commodity
  • legal tender
KengaRu [80]3 years ago
5 0

<u>The fiscal and monetary policies affect the value of the fiat currency. </u>

Further explanation:

Fiat money:

The fiat money is the currency issued by the government but the currency is not backed up by any commodity such as gold and silver. The value of the currency is determined by the demand-supply relationship and government stability. The currency is issued on the faith of the government. The U.S. dollar is an example of fiat money. As the fiat money is not backed up by any commodity, the change in the value of the currency depends upon the faith of the people on the currency. If the people of a country would lose the faith in the currency, the currency would be worthless.

Factor affecting the value of fiat currency:

The value of the fiat currency depends upon the fiscal policy of the country. The fiat currency is not backed up by the commodities. Therefore, it is merely depends upon the people’s faith upon the government. The government of a country can be tested by the fiscal policies made by it. The fiscal policies are the roadmap of the future growth a country. Therefore, the fiscal and monetary policies of a currency can affect the value of the fiat currency.

<u>Thus, the fiscal and monetary policies affect the value of the fiat currency. </u>

Learn more:

  1. Learn more about the monopolistic competition  brainly.com/question/5762511
  2. Learn more about the bank’s role  brainly.com/question/11382726
  3. Learn more about the insurance cover  brainly.com/question/7325538

Answer details:

Grade: Senior School

Subject: Economics

Chapter: Currency

Keyword: determines, value, fiat, currency, factors, money supply, commodities.

You might be interested in
The clayton antitrust act
Anon25 [30]
The Clayton Antitrust Act<span> is an amendment passed by U.S. Congress in 1914 that provides further clarification and substance to the Sherman </span>Antitrust Act<span> of 1890 on topics such as price discrimination, price fixing and unfair business practices.</span>
6 0
3 years ago
Please help me!! i really need it​
nataly862011 [7]

Answer:

Sorry Its cannot seen clearly.

7 0
3 years ago
How did the intolerable act unite people in the American colonist against the British
Talja [164]
I think it is because they all disagreed with the intolerable acts so they all got together and wanted to stop it. if its wrong oops
7 0
3 years ago
True or False: If Georgia's governor vetos a bill, there is no way for it to become a law.
Sav [38]

Answer:

false

Explanation:

because  two-thirds majority of each chamber must vote favorably to override the governor's veto which will make it a law

7 0
3 years ago
Read 2 more answers
What or who is credited with beginning the Great Depression in South Carolina?
Dvinal [7]

Answer:

George Mehales, a Greek immigrant who owned a diner in Spartanburg, South Carolina, began investing in the stock market just before the crash

Explanation:

found on

Great Depression - Library of Congresswww.loc.gov

8 0
3 years ago
Other questions:
  • What did the enlightenment thinkers believe anyone could use logic to do
    7·1 answer
  • Name three bright ring features on Saturn, and explain why they are so bright.
    14·1 answer
  • What cultural contribution did the Beat generation most clearly make?
    13·2 answers
  • How did the Second World War impact segregation in American society?
    11·1 answer
  • What is NOT a theory about the fall of Zimbabwe?
    8·2 answers
  • He doesn't know what side he's on. First he pledged loyalty to the
    6·1 answer
  • Why was letting seawater evaporate in the sun not an sufficient, or good, method for obtaining salt?
    9·1 answer
  • Explain what the MAIN causes of World War 1 were, and what they mean.
    14·1 answer
  • Explain the importance of tariff policies in the Republic of Texas. (OC1)
    14·1 answer
  • The man that established the nobel peace prize also invented what?.
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!