CA Foundation P4 · Chapter 8 · Question 2 of 15
Money that is accepted as legal tender by government decree but is not backed by any commodity is called:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Fiat money
Explanation
Fiat money derives its value from government order and public confidence, not from intrinsic value or backing. Full-bodied money has intrinsic value equal to its face value, and near money refers to highly liquid assets such as time deposits.
More Money Market MCQs
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