Question

______ money derives its value only because of government order.

Options

• Legal tender

• Fiat money

• Both Legal tender and Fiat money

• None of the above

Answer 1

Fiat money derives its value only because of government order.

Explanation:

Only the government's order gives fiat money its value (fiat). When the government declares the currency to be legal tender, it is known as fiat money. This is based on faith or trust rather than reserves. The real worth of this money is not equal to the face value displayed on the notes and coins.