In the context of money, identify a true statement about fiat currencies.
A) The value of fiat currencies remains constant.
B) Bitcoin is an example of a fiat currency.
C) They are digital currencies that are monitored by distributed peer networks.
D) A country can undermine the value of its fiat currency, rendering it valueless.

Question

Quizplus · Accepted Answer

Fiat currencies are backed by the government's declaration rather than a physical commodity or asset. Their value is not intrinsic but is derived from the trust and confidence in the issuing government. Therefore, if a country's economic policies or stability is questioned, it can lead to a loss of confidence in its currency, potentially rendering it valueless. This has happened in various instances of hyperinflation or economic collapse.

In the Context of Money, Identify a True Statement About