Question
Consider the following statements:
Select the correct answer using the code given below:
- Currencies and coins are fiat money
- Currencies do not have intrinsic value but coins have
- Currencies and coins are legal tenders
- Cheques are legal tenders
Select the correct answer using the code given below:
Answer: Option A
Answer: (a)
Currencies and coins are fiat money because they derive their value from government "fiat"/ order. If the coin is melted then it will not fetch the same value in the market and the paper of which the currency note is made does not have any value in the market.
Hence, Currency notes and coins are called fiat money and they do not have intrinsic value.
They are also called legal tenders as they cannot be refused by any citizen of the country for settlement of any kind of transaction. Cheques were drawn on savings or current accounts, however, can be refused by anyone as a mode of payment. Hence cheques are not legal tenders.
So only (i) & (iii) statements are true.
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Answer: (a)
Currencies and coins are fiat money because they derive their value from government "fiat"/ order. If the coin is melted then it will not fetch the same value in the market and the paper of which the currency note is made does not have any value in the market.
Hence, Currency notes and coins are called fiat money and they do not have intrinsic value.
They are also called legal tenders as they cannot be refused by any citizen of the country for settlement of any kind of transaction. Cheques were drawn on savings or current accounts, however, can be refused by anyone as a mode of payment. Hence cheques are not legal tenders.
So only (i) & (iii) statements are true.
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