PRC-3 · Chapter 17 · Question 8 of 20
Modern paper currency has no actual intrinsic value. People only accept it because the government has passed a law declaring it to be valid for settling debts. This type of currency is called:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Fiat money
Explanation
Fiat money is currency that lacks intrinsic value but is established as legal tender by government decree.
More Money MCQs
- Q10During a period of extreme hyperinflation, people rush to spend their money the exact second they get paid, refusing to save any of it…
- Q11A shopkeeper prices a loaf of bread at Rs. 100 and a dozen eggs at Rs. 200. By providing a common denominator to value completely…
- Q12Before money, people used the barter system. However, a farmer trading wheat for a cow had to find someone who had a cow AND wanted wheat…
- Q13Modern paper currency has no actual intrinsic value (it is just printed paper), but everyone accepts it because the government declares it…
- Q14During a period of massive hyperinflation, people rush to spend their salaries the exact second they are paid, refusing to save cash in a…