Currency notes and coins are termed as _____.
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Fiat money.
Currency notes and coins are called fiat money because:
-
They have no intrinsic value of their own (the paper or metal is worth much less than its face value).
-
Their acceptability as money is based on government authority and legal sanction, not on the value of the material they are made of.
-
They are legal tender, meaning people are legally bound to accept them in payments.