Why does fiat money have value?

Question

Quizplus · Accepted Answer

Fiat money has value because it is backed by the government and its laws, regulations, and institutions that guarantee its acceptance as a medium of exchange, unit of account, and store of value. It is not backed by a commodity such as gold, but instead derives its value from the belief and trust people have in it and its issuer, as well as the demand and supply forces in the market. Divisibility is a desirable attribute of money, but not the source of its value.

Why Does Fiat Money Have Value