In a fiduciary monetary system, the value of the money issued by a government is based on
A)the gold held in that government's vaults.
B)public confidence in that currency's acceptability and predictability of value.
C)the ability to convert it to some asset of value, like silver.
D)its being made out of some material with a market value equal to a bill's face value.

Question

Quizplus · Accepted Answer

In a fiduciary monetary system, the value of the money issued by a government is not based on the physical value of the material used to create the currency (as in option D) or the ability to convert it to some asset of value (as in option C). Rather, it is based on public confidence in that currency's acceptability and predictability of value. Therefore, option B is the correct answer. Option A is also not correct, as fiduciary systems are not based on the gold standard.

In a Fiduciary Monetary System, the Value of the Money