Currency notes and coins are termed as _____.

Fiat money.

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.