Fiat money has value because a government maintains its value, or because parties engaging in exchange agree on its value. It is not backed by a physical commodity, but rather by the trust in the issuer, and it does have value in exchange but no intrinsic value outside of this context.

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Fiat Money Is

Question 43

Multiple Choice

Fiat money is:

A) includes currency and gold in bank vaults.
B) does not include coins.
C) is backed by any sort of commodity.
D) has no value outside of its use as money.

Correct Answer: