Fiat Money Flashcards
What is fiat money?
Lacks intrinsic value and is legal tender by government regulation
Lacks intrinsic value and is legal tender by government regulation
What is fiat money?
What is fiat money based on?
Creditworthiness of the issuing government
Creditworthiness of the issuing government
What is fiat money based on?
What does the value of fiat money depend on?
Supply and demand
Supply and demand
What does the value of fiat money depend on?
What supports fiat currency?
The faith of its holders and virtue of a government declaration
The faith of its holders and virtue of a government declaration
What supports fiat currency?
What does a fiat currency depend on?
How a country’s economy is performing, how the country is governing itself, and the effects of these factors on interest rates
How a country’s economy is performing, how the country is governing itself, and the effects of these factors on interest rates
What does a fiat currency depend on?
When does a fiat currency function well?
Public has enough confidence in the currency’s ability to act as a storage medium for purchasing power
Public has enough confidence in the currency’s ability to act as a storage medium for purchasing power
When does a fiat currency function well?
Examples of commodity-based money
Gold, copper and silver
Gold, copper and silver
Examples of commodity-based money
Why are commodity-based currencies volatile?
Regular business cycle and periodic recessions
